Mar 25, 2022
About Archipelago: lighting reinvented
As the leading lighting manufacturing experts in LED lighting, Archipelago Lighting plays an important role in helping people keep their lights on–in a sustainable way. With a focus on reducing the energy burden across the world, as Original Equipment Manufacturers (OEMs), they’ve become leaders in the lighting industry, increasing efficiency while reducing operating costs.
Archipelago Lighting has the unique opportunity of manufacturing the parts that ultimately go into creating the final product, which may include lamps, panels, fixtures, vintage lighting and a host of other specialty products. While you may not be familiar with Archipelago Lighting, they likely have impacted your life through their products, as their lights can be found in many major retailers through private labeling.
With more and more demand for LED lighting, Archipelago also plays an important role in its commercial industrial side by servicing wholesalers, distributors, and lighting contractors.
The challenge: limitations due to manual B2B credit checks
Archipelago’s commercial customers were accustomed to paying bills within 30 days, a reasonable expectation in the industry. Archipelago was happy to extend payment terms, but it had to incorporate credit limits. The company, however, was self-financed and were forced to conduct manual background checks before extending credit. With an increasing customer base, processes were difficult to scale which severely affected their ability to grow the business. Credit limitations stifled their efforts at expanding each commercial account, as did their manual process.
When a new commercial customer was interested in submitting a purchase order, they were forced to go through Archipelago’s manual multi-page business card application form with a request for up to three trade references. Calling trade references and checking Experian for credit scores became a tedious process for Archipelago’s controller. At its worst, they were looking up seven to 12 customers' trade references on any given day which could result in 36 manual references per week.
"Resolve provides quick turnaround for our net terms and credit checks, which allows us to maximize the time and efficiency to closing a sale - something we weren’t able to do before." - James Deng, Director of Operations, Archipelago Lighting
This manual credit application process would take up to three business days for a customer to complete with another two to three business days for the accounting team to check references, and another business day to check Experian for credit. This review process alone resulted in a week-long waiting period for every new customer before Archipelago would even determine what net term and credit limit they would provide.
In some cases, Archipelago would take up to 10 business days to communicate back to interested customers. It was necessary for the Controller–who had to rely on qualitative factors–to make a decision about how much credit (if any) to provide to a new customer. Unfortunately, many customers lost interest after such a long period of time. As well, the process took valuable time from the Controller's schedule
Searching for a B2B accounts receivable solution
To meet the demands of their customers and grow their business, Archipelago needed a solution for accounts receivable management, credit check outsourcing, and net terms management.
James Deng, Product Manager, investigated and researched accounts receivable factoring companies but realized that factoring alone wasn't the solution: he wanted something more. He chose Resolve due to its ease of use, competitive rates, and Resolve’s responsiveness and relatability. Resolve exceeded his expectations: not only did they have access to cash when they needed it, but Resolve also took an active interest in helping the company succeed.
The lighting is on the wall: Resolve helps companies get paid faster
The benefits of outsourcing to Resolve were immediate for Archipelago. Manual business credit checks and net terms processes were quickly automated as they were replaced by Resolve.
Turnaround time decreased from 10 business days to just 24 hours. With Resolve’s pre-approval process, turnaround could even be as quick as the same day! Because the company was able to eliminate reviewing Experian credit reports, chasing references and delinquent accounts, and manually determining credit terms, the Controller and finance team now spend their time on value-added tasks and have even decreased their working hours (now that's a win!).
James and his team also have complete visibility behind each customer’s account and credit limits in real-time through Resolve's digital dashboard.
Before Resolve, losing customers was a huge pain point. The Controller was forced to be incredibly selective about who they prioritized for credit checks and providing terms. Unfortunately, some customers would lose interest or not become repeat customers because of the lag in process and inability to provide much credit.
Before Resolve, Archipelago wouldn’t carry too many customers on their maximum $5,000 credit limit. Due to the conservative nature of their financial operations, most customers would only receive, on average, credit limits between $1,000 and $2,500, a significantly smaller amount than requested. By removing the human subjectivity in making decisions about credit, Archipelago’s customers now have access to much bigger credit lines, nearly 20x higher than before.
Now, Archipelago offers an average credit line of $50,000 which has helped them close and retain new customers. Whereas prospective customers in the past would take their business elsewhere for larger orders, they are now excited to work with Archipelago as they can use the credit from Resolve to proactively expand their businesses. Many first-time customers ask for a credit amount nearly double the amount offered by Resolve--and Resolve finds win-win ways to accommodate these requests.
Glowing and growing through Resolve
Archipelago plans to continue using Resolve to increase sales by decreasing order loss and speeding up the purchasing cycle. With more time, they can also proactively encourage customers to take advantage of Resolve’s larger credit terms and leverage pricing to order more product then before. Through increased efficiency by partnering with Resolve, Archipelago can now truly focus on its core mission of educating and helping customers push energy efficiency without sacrificing quality.
