Multinational oil and gas Client’s Credit Reduction.

January 21, 2021
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Multinational oil and gas Client’s Credit Reduction.

Challenge: To reduce large credit balances on municipal accounts resulting from a legacy payment system over a long period of time

01 APPROACH

  • A comprehensive audit of actual invoices identified significant credit balances on certain municipal rates and utilities accounts
  • Simultaneously, certain municipalities were identified with large debit balances on accounts
  • There was limited ability to get actual cash refunds from municipalities due to local authority budget and cash flow issues

02  SOLUTION

  • Negotiation with municipalities to offset large credit balances against accounts with outstanding debit balances, thereby reducing the credit position and monthly operational expenditure, while simultaneously reducing the risk exposure to overdue accounts
  • Reduction in credit balances through managed cessation or reduction of payments on specific accounts

03  RESULTS

  • A total reduction in the credit balance of 72.3%
  • An immediate 60% reduction of total accounts in debit with the City of Johannesburg
  • The debit-credit offset model negotiated with the City of Johannesburg served as a precedent which is now being adopted further with the City and also with the remaining two major metropolitan municipalities in the Gauteng region

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