| Background | A publicly traded media company headquartered in the United States with operations in the United Kingdom provides the infrastructure for content producers and owners to stream their channels through a monthly subscription-based platform. |
| Challenge | The company was experiencing a rapid increase in past-due invoices, negatively impacting cash flow and raising concerns about why so many customers were delaying payments or defaulting. In many cases, unpaid invoices were eventually sent to collections and deemed bad debt. |
| Analysis & Key Findings | To address the issue, we conducted a thorough assessment of the company’s credit approval and collections process. Our findings showed that while the company had structured procedures in place, the issue lay elsewhere. Step 1: Identifying Customer Payment Patterns We categorized customers into two groups to identify trends: • Group A: Reliable Payers – Customers who consistently paid on time. • Group B: At-Risk Accounts – Customers who either started as good payers but later defaulted or had payment issues from the beginning. Step 2: Recognizing Common Traits Among Customers Through this segmentation, we discovered a clear pattern: ✅ Reliable Payers Shared These Traits: 1. Content was pre-existing – These content providers were not producing new content but were streaming previously created content to an engaged audience. • Example: A provider owning classic TV shows not available elsewhere, similar to how fans continue watching Seinfeld reruns. 2. Corporate Sponsorship – Some content providers were financially backed by corporations, ensuring stability. • Example: Land Rover funded and streamed a reality channel tailored to its car owners. ❌ High-Risk Customers Had a Common Challenge: • These customers needed to produce entirely new content, which was expensive and required them to build an audience from scratch. • While many started as good-paying customers, they struggled to generate consistent revenue, leading to non-payment issues and eventual defaults. |
| Solution & Outcome | ✅ SOLUTION: • We shared these insights with the sales team, enabling them to refine their go-to-market strategy and prioritize targeting customers with proven financial stability and sustainable business models. 📈 OUTCOME: • As the sales team shifted their focus to financially viable customers, newly acquired deals led to a substantial reduction in past-due accounts. • Accounts receivable improved, with 90+ day and 120+ day overdue invoices decreasing significantly, ultimately enhancing cash flow and financial stability. |
| Conclusion | By leveraging data-driven insights, the company transformed its customer acquisition strategy, improving cash flow and reducing bad debt risk. This case study underscores the importance of analyzing customer payment behaviors to drive financially sound business growth. |
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