Upload
lareina-mccarty
View
22
Download
0
Tags:
Embed Size (px)
DESCRIPTION
MANAGING THE SALES TAX EXEMPTION CERTIFICATE: Best Practices and legal considerations. Thadd Curry Ariat International [email protected] Matthew MacNeil Avalara [email protected] Scott E. Blakeley, Esq. [email protected]. 2 Park Plaza, Suite 400, - PowerPoint PPT Presentation
Citation preview
DEALING WITH THE HIGH MAINTENANCE CUSTOMER: CREDIT, FINANCIAL AND LEGAL ISSUES FOR THE CREDIT TEAM Mark H. Speiser
Scott Blakeley, [email protected]
18500 Von Karman Ave, Suite 530
Irvine, CA 92612
V. (949) 260-0611 | F. (949) 260-0613
www.BlakeleyLLP.comOrange County | Los Angeles | New York | Delaware
What Makes an HMC (Experience from Credit Peers) Invoicing and Account Maintenance
Unauthorized discounts Unearned deductions Withholding full payment on disputed invoice. Out-of-date IT requirements Cumbersome claim procedures to discourage resolution Overly stringent supply chain requirements that appear to be
profit centers Always asking for copies of invoices and POD’s EDI invoice receipt issues or a lack of compatibility Manual entry of invoices into vendor A/P portal Insists on order changes outside of normal operating processes
Failure to comply leads to deductions
What Makes An HMC Credit Terms and Payments
Consistently slow pay, requiring countless phone calls and emails Indispensable customer creates obstacles to payment, resulting
in holding orders, impacting inventory, DSO and cash flow Terms pushback: unilaterally changing terms Demands continued shipment/service with no payment Short pay invoices “Lost” payments with checks Regularly bounce checks Repeatedly make false payment commitments with multiple
excuses
Is Customer an HMC?
Credit policy: Tolerance limit Percentage of the invoice that is acceptable to stay current Minimum amount to avoid credit hold Dispute resolution practice
Key supplier metrics DSO Collection Effectiveness Index Days Inventory Outstanding Cash Conversion Cycle Cash flow and working capital management
The Credit Team: Gatekeeper or Relationship Preserver
Who has the leverage in the relationship? Punitive or accommodate response:
reconciling the account under traditional and modern credit approaches
Leadership objectives and the voice of the sale's team
Net Income (after operating costs)? Policy and procedures for reconciling to
account, managing A/R and collection strategy
Robinson Patman antitrust considerations
Industry Information Regarding HMC's Warning signs of delinquencies
A/R aging High credit risk score Timing for what is considered delinquent Collections Judgments Liens Bankruptcy Likelihood of small business to become severely delinquent Monitoring accounts
Tighter lending practices Vendors as lenders
Social media and non-traditional sources to measure credit risk
Monitoring of bank lending, term dates and covenants
Revisiting A/R Portfolio and Credit Policies
Examine traditional signs of customer defaults and adjust policy accordingly
Point person for change in terms, credit hold or credit enhancement
Is credit policy too restrictive or too liberal? Too loose or too restrictive must be formulated within the context of company
goals and profit margins
Adjusting policy to signs of customer defaults Using past insolvencies for predictive data points - data points
are then run against current profile to further refine portfolio risk
Dealing with Past Due Invoices yet Maintaining Sales
Ways to determine type of HMC (Is the relationship salvageable?) Request for financial information and confidentiality agreement Third party comment
Salesperson and credit pro customer visit Contact customer’s bank Talk to industry group members and other suppliers Landlord
Repayment agreements: fixing indebtedness and waiving claims
Credit enhancements Dealing with insolvency
HMC Divorce
Divorce or preserve the trade relationship? Indispensable customer? Collaboration with leadership, sales and credit Dropping the HMC may raise revenue and
reduce expense Economic conditions may force some credit
teams to preserve HMC Timing for assigning account to third party for
collection Document preservation with delinquent account