A financial recovery organization was struggling with cash flow, overhead costs and low liquidation rates
The situation
In 2008, the U.S. economy began a shift that flooded the market with bad debt and bankruptcies; traditional recovery models no longer worked. A mid-size U.S. financial recovery organization found that, due to its own outdated management structure, cash flow issues and excessive overhead costs, it could not acquire funding to purchase its next debt portfolio. The organization asked Alacer to help it proactively reinvent the way it conducted its business.
The challenges
The financial institution had no formal problem solving strategies in place, so its accumulated debt portfolio from 2008/2009, which required new, inventive ways to resolve, was still being carried on its books. Low liquidation rates, coupled with soaring overhead costs, severely impacted the organization’s profitability and cash flow. The Alacer team recommended deploying a multi-stage solution that introduced Lean Six Sigma methodologies for process improvements, leveraged a champion/challenger strategy for collections and flattened the organization’s management structure using Hoshin principles.
What Alacer did
Alacer recommended Lean Six Sigma and Hoshin techniques to flatten the organization, streamline processes and leverage a champion/challenger strategy to improve collections
Documented results
The new, less hierarchal organization required 10% less operational staff and was redesigned to align key process functions with business strategies. A champion/challenger strategy for collections resulted in a 100 BPS liquidation rate improvement on primary accounts and a 30 BPS improvement on secondary accounts. Bottom line: the improvements freed up enough capital to purchase the desired debt portfolio.
Historical Alacer engagement. Wording and results are based on the supplied original PDF. Numbers reflect the scope and time of this engagement; results vary. EPIF is the firm's current methodology and is not presented as the named framework used in these historical projects.