Protecting Cash Flow in a Crisis

CASE STUDY

In 2008, during the global financial crisis, a recycling and shredding company faced severe market pressures. Commodity prices collapsed, leaving recyclers across the industry struggling to survive. Many competitors failed, but this company endured thanks to proactive financial controls and disciplined accounts receivable (AR) management.

The Challenge

Acquisition of a shredding business created exposure to higher-risk small clients.
Commodity prices collapsed, severely squeezing margins across recycling operations.
No clear A/R policy in place, leaving collections inconsistent and unreliable.
Risk of significant write-offs and unstable cash flow during a volatile market.

The Solution

A structured A/R collections policy was designed and implemented:

Collaborated with the sales team to identify client types and payment risks, particularly in the shredding business.
Developed a tiered collections approach tailored to each line of business (shredding, recycling, hauling, commodities).
Introduced monitoring systems to track receivables in real time and flag issues early.
Worked with the audit team to establish a sound methodology for estimating allowances for bad debt.

This hands-on approach established a culture of accountability in collections and aligned policies across all business units.

The Results

The A/R policy produced immediate and long-term results:

Minimal Write-Offs

Across millions in receivables, only one customer defaulted, resulting in a write-off of less than $50,000—less than 0.5%—during the height of the financial crisis.

Sustained Practices

The monitoring and collections methodology remained in place after implementation, continuing to minimize risk and support stable cash flow.

Stronger Market Position

While many competitors collapsed, the company maintained financial stability and client trust, emerging with fewer rivals when conditions rebounded.

The Business Impact

By introducing a robust A/R collections policy at a critical moment, the company:

Safeguarded millions in revenue during the most volatile market conditions in decades.

Strengthened its financial foundation to weather downturns and continue growing.

Demonstrated to lenders, auditors, and clients that it had disciplined financial controls, bolstering trust in its operations.