An energy retailer faced pressure from increasing debt and rising BDC levels, creating significant capital adequacy concerns.
Our Debt Maturity Assessment made it clear that there was an immediate need to act to mitigate ongoing financial impacts.
We identified that there was the opportunity to achieve a ~£50m BDC reduction, across a variety of levers and processes spanning multiple business areas.
Our initial assessment also highlighted broader business-level initiatives that would enable the company to improve debt management in the longer term.
Our Approach
Based on our debt maturity assessment, we designed a programme to achieve the identified benefits.
This programme took a holistic approach to ensure all key gaps were addressed. We introduced new ways of working, implemented some ‘quick win’ approaches, and focused on implementing new rigour around clear ownership of debt challenges across both residential and SME.
We supported with:
- Improving performance across B2B debt collection, particularly across highest value accounts
- Improvement of 3rd party management of external warrants provider to improve processes and performance
- Aligning provisioning impacts of broader work into model aligned to industry best practice
- Helping create capacity in the reporting team to drive more business-need aligned reporting requests
- Designing and delivering a new approach for the allocation of Additional Support Credits (ASCs) across the customer service teams, to reduce incremental and long-term unmanageable debt build up on customers
- Providing support and sharing industry best practice in the design of final change of tenancy and change of supplier prepay journeys
- Supporting with the design, planning and prioritisation of operational billing improvements
- Delivering a debt sale of built-up customer final debt
Results
Key success included B2B debt reduction of £11m, of which:
- Warrant resolved £2.3m in B2B debt and progressed further £3.1m through streamlining workflow
- £2.6m reduction on the most challenging, hard to collect accounts
- £6.1m through debt campaigns and process improvements
In billing, we delivered a £6.9m reduction in stranded and erroneous debt through new billing and back-office controls.
Through a dedicated focus on contact centre agent training, improved call handling, and refined customer engagement strategies, the team successfully achieved over £1m reduction in Additional Support Credits (ASC) allocation. This helped prevent customers building up even greater unmanageable debt balances.
Alongside this, we enabled a further benefit to the P&L, by developing an alternative provision model that factored in the additional downstream value of these new approaches.
If you’d like to explore debt improvement opportunities for your organisation, contact Kevin Scott.
