Credit Risk to Collections Transformation.

An e-commerce organisation operating across APAC was absorbing a growing volume of bad debt year over year. Payment defaults had been accumulating with no structured mechanism to prevent, manage or recover them. The impact was showing on the balance sheet and the P&L.

The root cause was a governance gap at the point of vendor onboarding. Credit and payment terms had never been standardised. Each market and each vendor team operated on their own commercial terms, extended credit at their own discretion and followed up on overdue payments in their own way. There was no policy, no threshold, no approval framework and no enforcement mechanism.

The problem had escalated to the highest levels of finance leadership. A cross-functional taskforce was assembled involving six senior stakeholders across Finance, Commercial and Legal, led by the Transformation team.

The consequences were operational as well as financial.

Without standard credit terms, every vendor negotiation was a fresh exercise in improvisation. Without approval thresholds, credit extensions were granted at the discretion of individuals rather than governed by policy. Dunning notices were sent manually with no defined intervals, making follow-up inconsistent and legally unenforceable. Collection agents were not engaged until debt had aged beyond recovery. Legal notices were avoided because there was no documented basis to issue them.

Across 11 markets, the same seven gaps appeared in varying degrees. The problem was not isolated to one market or one team. It was systemic.

Bad debt write-offs had been escalated to finance leadership before the engagement began. The taskforce was assembled to understand why the problem existed and what needed to change. The diagnostic work revealed seven specific failure points:

1. No standard credit and prepayment terms
2. No maximum credit thresholds
3. No approval framework for deviation from standard terms
4. Manual dunning with no defined intervals
5. Hesitation to issue legal notices due to absence of documented basis
6. Collection agents not engaged at an early stage
7. Bad debts written off year over year without a structured recovery process

The first intervention was upstream. The Credit, Pre-payment and Collection Policy had been developed by Finance and Commercial leadership. The next challenge was operationalising it. A Credit Application Process was designed from scratch as a greenfield exercise, building the approval architecture that the policy required but did not yet have. Every credit request now had to pass through a defined approval chain before credit could be granted. A Credit Application Request form was built and automated to route requests through the appropriate review and approval stages.

With credit controls established at the point of origination, the downstream Accounts Receivable process was examined end to end. Payment monitoring, AR ageing report generation, reconciliation, SAP write-off posting, dunning, legal escalation and third party debt collection were all mapped, assessed and reengineered. The reengineering exercise ran for 45 days, followed by structured training across Commercial and Vendor teams.

The automation phase began only after the reengineered processes had been observed in operation for 30 days. Three RPA bots were then designed, built and deployed:

1. Bot 1 automated AR Ageing Report generation across Restaurants and Corporates
2. Bot 2 automated the reconciliation and compilation of ageing reports into the master file
3. Bot 3 automated the preparation and dispatch of the collection list to third party debt collectors

SAP dunning notices were configured with defined intervals, replacing the previous manual process.