A Review of the Current Receivables Management Policies and Practices for Leading Pharmaceutical Company in India
The company, through acquisitive growth, had successfully integrated various product lines, across divisions to become one of the largest pharmaceutical groups in terms of market share in India. However, the various divisions not only had an uncommon distributor base, but also varying credit policies were being followed across divisions. The top management and senior management at the company were of the opinion that the formulations division required a review of their credit policy in conjunction with the sales policy.
UC took the following steps for this project:
- Conducted primary research in the Northern and Eastern markets to identify factors impacting receivables management and classified the factors with respect to the marketing strategy and the demand chain
- Benchmarked best practices being followed in the pharmaceutical and FMCG industries and captured key learnings that could be adopted by the company
- Defined a framework to classify distributors into Class A, B and C based on a set of parameters and overall ratings
- Evaluated distributor performance against the defined parameters and classified them based on national and regional performance
- Evaluated the feasibility of outsourcing collection services to various banks.
The client received a definition of a common set of policies across divisions and recommendation of a differential policy structure to be followed for class A, B and C distributors.