Legal Issue: How a Food Distributor Saved 22% of Revenue and Recovered $312K in 45 Days
- Industry: Food & Beverage Distribution
- Debt Amount: $340,000 across 8 accounts
- Age: 60-180 days past due
01 | Problem
A California distributor’s AR Manager faced a crisis: eight Mexican restaurant chains owed a combined $340,000, with accounts aging from 60 to 180 days. Their collection agency gave up after “attempted phone contact,” suggesting litigation would cost more than recovery. The AR team spent 15+ hours weekly chasing payments with minimal Spanish proficiency and no understanding of Mexican business culture. Management considered cutting off all Mexican sales, eliminating 22% of their revenue.
02 | Solution
HMH Legal deployed a systematic approach:
- Week 1: Conducted on-site visits to all eight debtors across Mexico City, Guadalajara, and Monterrey
- Week 2-3: Negotiated payment plans based on each restaurant’s cash flow situation
- Week 4: Implemented our Credit Management services to prevent future issues, including improved terms of sale and enforceable Pagarés (promissory notes)
Our amicable approach preserved business relationships—five of the eight debtors were experiencing temporary cash flow issues, not intentional non-payment.
03 | Result
- Recovered: $312,000 (92% of total debt)
- Timeline: 45 days average collection time
- Relationship preserved: 6 of 8 accounts resumed regular ordering
- Ongoing benefit: New payment structure reduced DSO from 87 to 51 days
The distributor avoided losing nearly a quarter of their revenue stream and gained a systematic approach to Mexican credit sales.
"HMH Legal helped us secure our sales transactions in Mexico."
"Before working with them, I had some anxiety about doing business in Mexico, as I felt I didn’t fully understand the potential risks involved. They did a great job revamping our documentation, but what really impressed me was the time and effort they spent helping our local credit department “sell” these new documents internally to the sales team, many of whom were initially apprehensive the stricter docs might hinder sales. HMH allayed those fears, and now, knowing that we now have a strong set of documents for credit sales, it has taken away a lot of the concern about credit risk. We now have confidence in granting or increasing credit knowing that we have the necessary tools to fully protect the company’s interests."
"Before working with them, I had some anxiety about doing business in Mexico, as I felt I didn’t fully understand the potential risks involved. They did a great job revamping our documentation, but what really impressed me was the time and effort they spent helping our local credit department “sell” these new documents internally to the sales team, many of whom were initially apprehensive the stricter docs might hinder sales. HMH allayed those fears, and now, knowing that we now have a strong set of documents for credit sales, it has taken away a lot of the concern about credit risk. We now have confidence in granting or increasing credit knowing that we have the necessary tools to fully protect the company’s interests."
Brian Seekamp, Global Director of Credit
Osterman & Company, Inc.
Services
Our services in Secured Transactions and Litigation early on of the sales process or upon negotiations or restructure of a loan or debt, are key to prevent or properly address a problem situation, as the one pointed out.
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