Pre-Insolvency Sales Ledger Review & Valuation

An accurate picture of your client’s ledger

Given the complications that often surround sales ledgers, it is vital for asset based lenders and Insolvency Practitioners to gain an accurate picture of their client’s ledger at the earliest opportunity to protect their position and ensure recoveries and returns for creditors can be maximised.

Unlike hard assets, for example, sales ledgers often contain hidden dilutions which can significantly and rapidly reduce the collectable value of a ledger and the resulting capacity to recover monies secured against them.

Hilton-Baird’s team are able to conduct thorough collectability and contingency reviews, assessing the people, systems and paperwork underpinning the receivable. We’ll scrutinise the nature of the receivable and the client’s order-to-cash process, identify hidden dilutions and establish the strength of the paper trail and proof of debts needed to collect in an insolvency situation.

The outcome is a detailed report that includes recommendations to protect exposures and mitigate losses, an Estimated Outcome Statement (EOS) based on a number of scenarios in an insolvency situation, and a valuation that’s aided by our debtor verification and debtor insolvency checks.

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What are the benefits of our service?

The information we provide will enable asset based lenders to understand the collectability of the ledger, putting you in a much stronger position to make key decisions and maximise returns
Insolvency Practitioners will benefit from a more accurate EOS, based on an in-depth understanding of the ledger and debtors’ overall health and collectability
Provides increased visibility and certainty of realisations in an insolvency
Output could also include a forward cash collections report to highlight what cash should be collected when/if paid to terms by debtors
Our Telephone Debt Verification service can be undertaken remotely and typically turned around within 48 hours
The service can also be extended to ongoing ‘ledger monitoring’ to provide visibility in the run up to an insolvency event or to provide a governance framework and assurance where ‘Newco’ is appointed to collect the ledger
Valuation will also provide a ‘base case’ against which to measure ‘Newco’ collections performance if they are engaged to collect ‘Oldco’ debt
Information gained and paperwork collated at this stage will be invaluable in a collect out scenario

What does the pre-insolvency ledger review cover?

The review can be tailored to the specific circumstances of the client but typically covers collectability and contingency reviews.

The collectability review focuses on the receivable and any nuances that might impact its value:

Sales ledger review: analyse sales ledger for ageing, contra, concentration and debtor quality
Determine reasons for any dilutive debt balances
Telephone debtor verification: contact a representative sample of debtors to support EOS calculation
Conduct an extended transaction test
Ledger risk information can be provided via our credit status monitoring API, highlighting any doubtful, adverse or insolvent debtors
EOS: Understand potential ledger dilutions in a collect out scenario: review key debtor contracts for relevant clauses relating to liquidated damages / consequential loss, determine rebates to produce an EOS
Comment on and make recommendations for any significant findings

The contingency review commences with gaining a deeper understanding of the sales order-to-cash processes to aid determining the following areas:

People: identify key members of staff, understand responsibilities and roles, identify key account staff outside of the finance function responsible for order fulfilment, Electronic Data Interchange (EDI), management of debtor and haulier portals etc.
Systems: acquire a working knowledge of all internal (accounting and sales ledger) and external (EDI, portals and 3rd party carrier) systems to allow ledgers to be produced, statements to be run, and copy invoices to be produced; additionally, understand and locate how data is stored relevant to credit management processes, namely email orders, purchase orders and proof of deliveries.
Paperwork: understand where physical and electronic paperwork is stored, filed and located, and how best it can be secured and extracted.
Contingency risk assessment: produce a supporting documentation risk assessment identifying any areas where pro-active action is required to mitigate any risks.

Why use Hilton-Baird?

Hilton-Baird Collection Services has been at the forefront of commercial debt collection since 2001, having assisted Insolvency Practitioners and asset based lenders with a wide range of debt collection and verification requirements.

Our constant refining of our services to deliver what our clients are looking for has allowed us to work with some of the biggest names in the UK and Europe, and led to our team winning several awards along the way.

To enquire or find out more about how we can help, please call 023 8070 6981 or email cs@hiltonbaird.co.uk.