Homepage  |   E-mail this article  |   Print

---

---

Advertisement

1:00 am, August 18, 2008
Late payment "panic' creates opportunity

BY CRAIN'S STAFF REPORTER

Late payment is a bugbear, but not for a new venture set up by two former executives of internet security firm SurfControl.

Optima Receivables Management, founded by Julian Llewellyn and Ed Van den Berg, is an outsourcing company which offers a web-enabled credit management service to small and medium-size businesses.

They hope to find a ready market among companies whose customers use late payment as a cheap source of funding. The situation has become more acute during the credit crunch, with big companies increasingly seeking to enforce 90-day terms.

Birchwood-based Optima began trading last October, marketing only within the North West, and is now turning over around £15,000 a month. Llewellyn said the target was to reach an annualised run-rate of £1.2m within 18 months. Typically, the service costs less than 0.5 per cent of total sales invoices, subject to age of debt, industry type, geographic spread and value of live accounts.

Llewellyn said: “For me efficient cash management is crucial in any economic environment. Too many businesses focus on sales or profit when actually the thing that is most important is cash. I was involved with a joint venture with a Chinese company and as long as cash in was more than cash out, we would have a very short meeting. If you haven't had an effective regime of cash management and customers have got the idea that you are soft touch, they will take advantage. Changing that perception can be quite difficult.”

Llewellyn and Van den Berg left Congleton-based SurfControl after it was acquired by San Diego-based Websense Inc last year and used their own money to set up the new firm.

Julien Rye, senior audit partner at BDO Stoy Hayward in Manchester, said he saw a good opportunity for the company as long as it got its sales strategy right. Rye said: “A lot of SMEs are going to the bank to extend their overdrafts and the banks are saying no, so that means they have to find the money in other ways and that usually means being more efficient at getting debts in.”

Peter Gent, Salford-based national sales manager at Atradius Collections, part of a Dutch credit insurance group, said he detected a whiff of panic over late payment, which had led to an increase in referrals of 25-30 per cent so far this year.

“I have got an annual target of 32 new clients and, so far in 2008, I have signed up 45,” said Gent. “We're getting approached now whereas in the past it was a struggle to find new business. Credit controllers see debts get 30 days overdue and feel they have to do something.”



COMMENTS? manchesternews@crain.com