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Case Study

Improv­ing the effec­tive­ness of receiv­ables — despite an increase in workload



Our client pro­vides drilling rigs, equip­ment, per­son­nel, and camps on a con­tract basis to explore and devel­op oil and gas from onshore areas, fixed plat­forms, tension-leg plat­forms, and spars in off­shore areas. Oper­at­ing glob­al­ly, the client is head­quar­tered in North Amer­i­ca and owns the largest land fleet of AC drilling rigs in the world.

As part of a mar­ket­ing and finan­cial analy­sis, our con­sul­tants uncov­ered many out­stand­ing receiv­ables. It was sub­se­quent­ly agreed that a com­pre­hen­sive process for track­ing and man­ag­ing receiv­ables would be required.

The ini­tial amount out­stand­ing, although sig­nif­i­cant, was still with­in the accept­able para­me­ters at the time. How­ev­er, the client decid­ed to inves­ti­gate the process fur­ther, based in part on our analy­sis. The deci­sion proved to be the right one when the true expo­sure turned out to be well out­side the clien­t’s expect­ed parameters.

Our analy­sis unearthed the fact that there was an aver­age of 45 Days Sale Out­stand­ing (DSO) while its cus­tomers enjoyed a DSO of 23 days. In effect, the client was pro­vid­ing pro­vid­ed sev­er­al mil­lion dol­lars worth of funds to its cus­tomers interest-free.


Fol­low­ing the analy­sis, we launched and super­vised a DMAIC (Define, Mea­sure, Analyse, Improve, Con­trol) team to address over­due receiv­ables. Our role was to sup­port the clien­t’s team and pro­vide knowl­edge trans­fer dur­ing the imple­men­ta­tion stage.

The major work­stream focused on the process­es for han­dling invoic­es aged more than 30 days, specif­i­cal­ly tar­get­ing those over 90 days. Addi­tion­al­ly, the project touched on work­flows asso­ci­at­ed with billing by audit­ing issues and errors that could affect collection.

The team found that the aver­age age of receiv­ables over­due by 90 days or more was 326 days, were in dis­pute, and not being worked on.

There was also no clear process for dis­pute res­o­lu­tion or own­er­ship of the process. Indeed, the cur­rent approach had sev­er­al billing ana­lysts call­ing the same cus­tomer in dif­fer­ent geo­graph­i­cal regions to resolve invoic­ing issues.

The project gave focus to the Accounts Receiv­able func­tion and gen­er­at­ed a very effi­cient process that achieved all of the goals we set for it. The team built a very sus­tain­able and repeat­able process.

Vice Pres­i­dent & Controller


Rec­om­men­da­tions by the DMAIC team result­ed in the for­ma­tion of an Accounts Receiv­able group as part of the Domes­tic Rev­enue depart­ment. This would allow clos­er coor­di­na­tion between the Billing and Receiv­ables activ­i­ties. Whilst ini­tial­ly staffed by the team, ded­i­cat­ed per­son­nel were assigned whose main respon­si­bil­i­ties were to mon­i­tor and resolve receiv­ables issues.

Key to the suc­cess of the pro­gramme was the imple­men­ta­tion of a man­age­ment con­trol sys­tem (MCS) to bet­ter man­age receiv­ables. Part of the sys­tem includ­ed month­ly sta­tus reviews between Accounts Receiv­able, Sales, and Finance, as well as clear def­i­n­i­tions of respon­si­bil­i­ties for time­ly col­lec­tion of payments.

Feed­back from audit­ing of issues and errors became the basis for train­ing and doc­u­men­ta­tion of key Billing processes.


The over­all result was the sig­nif­i­cant reduc­tion in over­due as shown below:


86% reduc­tion in receiv­ables over the 90 days with­in the first 12 months 


Rig count increased 


Billing increased 


Invoic­es increased 

In addi­tion to the finan­cial results, rela­tion­ships with cus­tomers have grown stronger as a result of improved cus­tomer ser­vice and a sin­gle point of con­tact for all issues relat­ing to billed invoic­es. Cross-training has now been estab­lished with the Billing group to allow clar­i­ty of process, roles and respon­si­bil­i­ties asso­ci­at­ed with Accounts Receivable.

Process­es are now well-documented and train­ing mate­ri­als have been devel­oped. The ini­tia­tives intro­duced in this pro­gramme rein­forced the DMAIC in deliv­er­ing sig­nif­i­cant and sus­tain­able busi­ness per­for­mance improvement.

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