When customers don't pay their bills, the company's revenue stream takes a hit. This is an obvious business risk, but also one that's complex to manage. For some companies, small shifts in the global economy wreak havoc on accounts receivable (A/R).
Consider DS Services of America, the nation's largest provider of home and office delivery of bottled water, under well-known brand names such as Crystal Springs and Sparkletts, as well as a leading office coffee and water filtration service provider.
"The products that we sell are sometimes considered discretionary items, so when the economy is soft, demand for our products may decline," says Darin Ball, vice president of credit and collections for DS Services. "Another unusual aspect of our A/R risk is that we have a very large customer base. We don't have the manpower to contact every customer who may be slow in paying, especially considering our business is made up of a very large volume of small balances. Our challenge is to figure out how we can maximize our efforts in targeting the right customers to collect our overdue receivables."
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