smbaccess credit services presentation
TRANSCRIPT
www.techdata.com
Scott TillesenDirector of Credit, SMB Accounts
SMBAccessCredit Services Presentation
1. Tech Data Credit Philosophy and Electronic Credit Related Tools
1. Tech Data Credit Philosophy and Electronic Credit Related Tools
2. Top Ten Ways to Obtain More Credit !
2. Top Ten Ways to Obtain More Credit !
January 16, 2007 AgendaJanuary 16, 2007 Agenda
Tech Data Credit Philosophy and Electronic Credit Related Tools
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• To support the sale of products to our customers.
• To utilize a wide variety of financing options and provide guidance that is beneficial to our customers.
• To operate within an acceptable range of expense and investment.
Tech Data Credit PhilosophyTech Data Credit Philosophy
www.techdata.com
• On-line invoice inquiry
• On-line customer statements
www.techdata.com/TDDirectPay
• Internet Bill Presentation and Payment System
Electronic Resources at Tech DataElectronic Resources at Tech Data
Top Ten Ways to Obtain More Credit !
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#10 Anticipate How Assets will be Financed#10 Anticipate How Assets will be Financed
Concept: For every dollar of assets,you need a dollar of financing.
• As revenue grows there will be more assets.• Plan how additional assets will be financed.• Three general sources of financing:
– Vendors– Banks– Shareholders
Financing Pie ChartFinancing Pie Chart
Bank Financing
Equity Financing
Trade Financing
#9 Generate a P&L Statement Without Losses#9 Generate a P&L Statement Without Losses
Concept: Credit Managers like to see profits.
• Profits are a source of financing.• Reflection of management’s capability.• Indication of margin accomplishment and
overhead control.• Provides hope that there will also be profit in
the future.
#8 Operate Within Competencies#8 Operate Within Competencies
Concept: You’ll be more profitable if you do what you do best.
• Know your advantages.• Sometimes you’ll need to re-evaluate your
specialty.
#7 Demonstrate “Cash Days” Aptitude.#7 Demonstrate “Cash Days” Aptitude.
Concept: Strong management of working capital is important.
• Days of A/R plus Inventory minus A/P equals Cash Days.
• Timely collection of accounts receivable.• Minimize investment in inventory.• Maximize accounts payable (vendor financing).
Collection success and value worsens with the age of the invoice.
Billing Date
Invoice Due Date
CollectionDate
• You’ve done your part remind them it is time to do theirs.
• Have a strong credit application.
• Develop a route of escalation.
• Outsource what you can’t effectively handle internally.
• Stick to your process.
• Know when to pull the trigger.
Timely Collection of Accounts ReceivableTimely Collection of Accounts Receivable
#6 Know When to Live to Fight Another Day#6 Know When to Live to Fight Another Day
Concept: Businesses don’t last forever, markets change, competition changes.
• It is good strategy sometimes to retrench, slow down, and catch your breath.
• Significantly greater risk of being seriously injured when you play hurt.
• Classical life-cycle theory suggests business can’t always be in a growth mode.
• Windows of opportunity don’t stay open long.• Decide while you still have choices.
#5 Capitalize on the Strength of Your End User#5 Capitalize on the Strength of Your End User
Concept: Receivables from your End User are valuable collateral to your creditors.
• Assign your accounts receivable to your Vendor or Bank, aka “Assignment of Proceeds.”
• Arrange lease financing for your End User with payment direct to your Vendor.
• Reseller and their qualified End-User agree to assign payments directly to Distributor.
– Tech Data offers an alternative payee: Optimum Financial
• For commercial, state, and local government End Users.
• Escrow Access for Federal government purchases.
Assignment of Proceeds FinancingAssignment of Proceeds Financing
Enables large sales to qualified end users.Enables large sales to qualified end users.
• Reseller presents End User to Leasing Company.
• Leasing Company approves and documents the deal.
• Leasing Company pays you and your Vendor.– Tech Data Leasing Partner options:
GE Commercial Distribution Finance; IBM Global Finance; Citicapital; Key Equipment Finance; and others with prior approval.
End User Lease FinancingEnd User Lease FinancingCan conserve capital and match your customerCan conserve capital and match your customer’’s cash flow. Quick response, s cash flow. Quick response,
simple documentation, commission on approved leases.simple documentation, commission on approved leases.
#4 Shareholder Equity Sources#4 Shareholder Equity Sources
Concept: Demonstrates to financing sources that there is adequate “skin in the game.”
• Vendors compare the size of their investment to yours.
• Credit managers like to see profits retained in the business.
• Quantify sources of additional shareholder investment.
#3 Maximize Overall Vendor Credit.#3 Maximize Overall Vendor Credit.
Concept: Vendor financing is “free” and helps fill the cash days gap between
billing and collection.
• Understand your Vendors credit review and other processes.
• Be sure your Vendors know your processes. • Letters of Credit and Guarantees can help get
Vendors more comfortable.
• Review Credit Application for completeness.
• Review payment experience of other suppliers are reviewed.
• Review third party Credit Reports.
• Evaluate payment experience and history.
• Analyze financing sources.
• Study financial statements.
Vendor Credit Review ProcessVendor Credit Review Process
• Standby Letter of Credit (SLOC)– Payment assurance provided by your bank.
– More cost effective than a bank loan.
– Stands as secondary support for payment.
• Documentary Letter of Credit– More common for individual international transactions.
Letters of CreditLetters of Credit
Provides additional credit beyond your open account.Provides additional credit beyond your open account.
• Personal Guaranty– Owners or officers make personal commitment.
– Can be rescinded at any time.
– Appropriate at certain times.
• Cross Corporate Guaranty– Assurance of payment from a related business.
GuaranteesGuarantees
Can enable the extension of credit beyond your open account.Can enable the extension of credit beyond your open account.
#2 Utilize Appropriate Third Party Financing#2 Utilize Appropriate Third Party Financing
Concept: Every Fortune 500 company utilizes third party financing.
• A bank is needed to close the gap between accounts payable and accounts receivable.
• Financing from a Vendor’s financial partner has advantages.
1. Reseller applies and obtains a credit line with an approved Finance Company.
2. Reseller places order with Vendor (as usual.)
3. Vendor obtains electronic authorization from the Finance Company and ships the order.
4. Finance company pays Vendor.
5. Reseller pays the Finance Company.
3rd Party Financing Thru Vendor3rd Party Financing Thru VendorCan provide you with added credit availability and free financinCan provide you with added credit availability and free financing.g.
• Supplements your Tech Data open account.
• Free financing supported by Tech Data and certain Vendors.
- 30 to 60 days in most cases
• Tech Data Financing Company Partners:- GE Compter Distribution Finance, IBM Global Finance, Textron Technology Finance, and De Lage Landen
3rd Party Financing thru Tech Data3rd Party Financing thru Tech Data
#1 Timely and Full Communication#1 Timely and Full Communication
Concept: Credit Managers don’t like to play “Catch Me If You Can.”
• Share financial statements.
• Announce management & ownership changes.
• Describe mergers and acquisitions.
• Communicate thru email and website.
• Bad news is better than No news.
Top Ten Ways to Obtain More CreditTop Ten Ways to Obtain More Credit
1. Timely and full communication.2. Utilize appropriate third party financing.3. Maximize overall vendor credit.4. Shareholder equity sources.5. Capitalize on the strength of your End User.6. Know when to live to fight another day.7. Demonstrate “Cash Days” aptitude.8. Operate within competencies.9. Generate a P&L Statement without losses.10.Anticipate how assets will be financed.
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