With the assistance of The Enterprise Development Center in Khujand, "Vavilon", a freight forwarder, implemented a credit policy resulting in a decrease in Working Capital Days of 30% and a decrease in Days Sales Outstanding of 45%. This freed up the working capital needed to implement a Strategic Action Plan (SAP), which in turn resulted in a 95% increase in sales.
Established in 1999, Vavilon is located in Khujand, Tajikistan, and since 2002, freight forwarding has been their core business. Vavilon now has five offices in Tajikistan, one office in China, two agent offices in Russia, and employs 35 full time personnel. Vavilon is key part of the agribusiness value chain for the region, transporting products for growers and processors. The Khujand EDC began working with Vavilon in May 2003 and completed the Strategic Action Plan in November 2003.
In January 2004, Khujand EDC Relationship Manager (RM) Kosimbek Abdurahimov collected the financial data for 2003 to compare with the most recent Key Monitoring Ratios. While most of the trends were positive or stable, one ratio in particular caught the RM's attention. The Days Sales Outstanding (DSO) for the company had doubled in the past year. As the client base for the firm grew, Vavilon made a greater number of sales on credit. Vavilon was having difficulty collecting these credit sales in a timely manner. If this trend continued, Vavilon would not have sufficient working capital to fund its growth and would face a greater risk of insolvency.
Kosimbek and EDP trained Certified Accountant Practitioner (CAP) Shuhrat Hojaev developed a customer collection policy and a revised organizational structure that would not only reduce Days Sales Outstanding (DSO), but would also facilitate continued growth. Commercial Director of Vavilon, Shuhrat Soliev, summed up the intervention stating, "EDP consultants warned us about an impending problem and helped us to free up our working capital by improving our credit policy and collection of our accounts receivable."
After instituting the policy, hiring a new member of staff dedicated to sales collections, and implementing 3 new business departments, Vavilon was able to control its accounts receivables and achieve a 45% decrease in DSO. With sufficient working capital, Vavilon was able to undertake actions developed in their Strategic Action Plan (SAP) by EDP. Vavilon expanded its presence into Southern Tajikistan and internationally into China. They also added new services to clients, including customs clearance and E-Commerce services. Vavilon's sales have grown 95% in the past six months and with the help of EDP they are able to continue expanding without risk to their financial stability.
It looks like there are also further great results on the way from Vavilon. The management of the company, having seen the success of the new accounts procedures, turned to EDP to improve the staff's managerial skills. Currently two of Vavilon's accountants are taking courses in International Accounting Standards provided by EDP in Khujand.