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  • Black Holes and Heroes

    At times, the only force holding an organization together and preventing it from falling into the abyss comes from unsung heroes within its ranks. Read this article by Ron Lutka, CMA to find out more about the unsung heroes. There might even be parallels here to your organization.

     
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  • Black Holes and Old Invoices

    My article titled Black holes and Credit Management published in To Your Credit’s fall 2007 edition began with this paragraph:

    “Credit management is an integral and highly visible part of the cash-to-cash business cycle, in which cash invested by shareholders is used to produce and deliver goods and services that are sold for even more cash.

     
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  • ELECTRONIC FUNDS Transfers and Fraud

    Electronic Funds Transfers (“EFTs”) are widely accepted as a method for organizations to transfer funds on a timely basis to suppliers, employees and other organizations. However, EFTs can pose an internal control weakness for many organizations. Employees can circumvent the built-in internal controls, if any, and defraud the organization of significant amounts of cash at one time or over a period of time. EFTs typically allow employees to withdraw organizational funds by way of an Online Banking Agreement (“OBA”) in which an employee may ...

     
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  • Receivable Insurance Tips

    It is critical that you understand your obligations under the credit insurance policy you have signed and that you are complying with them.

     
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  • Collecting from your large customers: Is it 'Collections' or 'Corrections'?

    A few years ago I was at a major railroad company for imparting training sessions on the topic of Collection Skills and Receivable Management. On the first day of training a, I realized that the collections staff was made up of people who had a significant number of years of collections experience. The group was an enthusiastic batch; however most of the proven collections techniques were being met with...

     
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  • Predictive Indicators - Learn how to read the signs and improve your bottom line

    Managing your company’s exposure to risk has become a challenging task. There is more pressure to speed up the credit review process and more responsibility resting on your shoulders to be accountable for your decisions and improve company profitability.

     
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  • Supreme Court Rules Crown Doesn’t Have Rights To GST And QST

    In a unanimous decision on October 30, 2009 relating to the Goods and Services Tax (“GST”) and the Quebec Sales Tax (“QST”), the Supreme Court of Canada rejected the most recent attempt of the Crown to secure its position by recovering the tax portion of accounts receivable outstanding at the time of bankruptcy where the bankrupt had not made the required remittances.

     
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  • Factoring Agreement: Security or Sale of Assets?

    Lenders and other members of the factoring community should be aware of the potential impact of a recent ruling on a priority fight over the accounts receivable of a bankrupt company.  One of the issues that the court had to consider was the application of a factoring agreement.

     
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  • Debt Collection Rules

    If you deal with consumers, you should be mindful of the debt collection laws in force in the jurisdictions where your customers are located.  Adapted from the...

     
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  • Cash Flow Myths

    It's just too easy to mislead the average investor in Canada. Financial reports can be arcane and confusing even for professionals. Adding to the problem are regulators who don't care to clean up pervasive scams, much less make financial statements more usable for investors.

     
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  • Fraudulent Financial Information

    Often, the depth and breadth of a credit analysis is based on the risk associated with a potential or existing customer.  For example, when the risk is considered low, a simple trade reference check might suffice whereas in cases where the stakes are high, many seasoned and trained credit managers will resort to financial statement analysis.  Aside from the challenge of getting your customers to furnish financial statements, determining the reliability of such documents can prove to be quite tricky.

     
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  • Financial statement simple analysis

    In today's environment the obtaining of Financial Statements from a customer is becoming virtually impossible. A good credit professional needs to sell his customer on the benefits of supplying at least a common size balance sheet and income statement in order to justify a credit limit sufficient to meet both yours and the customer's needs.

     
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  • Role of the Credit and Collections Department in Business

    Companies expect their credit department to be sales oriented. Put simply, this means the credit department should be looking for reasons to justify establishing open account terms and/or releasing orders pending, rather than looking for excuses to hold orders or to reject applicants for open account terms. Having this simple idea in mind can make

     
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  • The 4C's of Credit for Business

    Credit people look carefully at trade accounts, especially in tough financial times, before they ship goods. What credit managers look for can be...

     
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  • Understanding Accounts Receivable Metrics: DSO, CPI, CEI

    Finance professionals calculate DSO by dividing Total Accounts Receivable (A/R) by Total Credit Sales multiplied by the number of days in the measurement period.

    For companies using Collection Productivity Index (CPI), it is the amount of cash collected per collector as a % of the opening A/R for each fiscal quarter. As quarterly sales are not linear month to month, (heavily weighted in a particular month) you will find this to be...

     
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  • Calculation of the Collection Effectiveness Index’s
    Days sales outstanding - measures the time it takes a company to collect account receivables from credit sales. It provides a good understanding of the effectiveness of the account receivable collection policies and staff in charge of executing on those policies.
     
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  • Standard Ratios

    Liquity Ratios

    • current Ratio
    • Acid Test

    Debit - Equity Ratios

    • Current Debt to Tangible Net Worth
    • Total Debt to Tangible Net Worth
    • Working Capital
    • Net Worth
     
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  • Credit Rules (Axioms)

    If short-term credit suppliers are paid by asset conversions, then the primary interest should be centered on the balance sheet and their focus of attention should be liquidity.

     
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  • Credit and Collections as a Revenue Generator
    Next time you are spending quality time with a client, at a board meeting, or getting an update from the CFO you may want to inquire about practices of their company’s credit and collections department. The credit and collections department is constantly interacting with the company's customer base. This provides them with opportunities to augment sales, identify customer needs and problems, and / or be proactive in collecting those slow paying accounts. A properly operated credit and collections department can enhance profits and earnings per share.
     
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  • Why you should consider selling to risky accounts
     
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  • Why are monitoring and control procedures critical to reduce bad debts and overdue accounts?
     
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  • Credit Scoring

    Most credit scoring systems have been developed for use by banks. This has been adjusted to reflect both consumer and mercantile business. Credit scoring is a method of evaluating the credit risk of customers ...

     
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  • Credit and Collections Department Should Be Generating Revenue

    Next time you are spending quality time with a client, at a board meeting, or getting an update from the CFO you may want to inquire about practices of their company's credit and collections department. The credit and collections department is constantly interacting with the company's customer base. This provides them with opportunities to augment sales, identify customer...

     
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  • Credit Risk Management

    Credit risk is defined as the likelihood of loss resulting from a customer's failure to pay for the goods delivered. It is the responsibility a Credit Manager to verify that all customer files are complete and contain all the necessary information to protect the accounts receivable.

     
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  • Collection and Dispute Management

    The objectives of the Collection team are to:

    • Facilitate a seamless processing of Sales orders within a specific risk guideline defined by the Credit and Collection department
    • Liaise with the Sales department and the credit department to anticipate any future discrepancy between the Sales plan and the maximum risk exposure
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  • Warning Signs

    We've listed some of the warning signs of fraud below. The most important is the country of origin.

    • Orders originating from or containing shipping or billing addresses in some countries, particularly Romania, Macedonia, and Belarus, have an extremely high incidence of fraud.
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  • Preventative Creditry
    Formulas for Success in Credit Granting & Collection Presenter: Rodger Noel, ACI, Credifax Atlantic
     
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  • How a commercial lender will evaluate your creditworthiness for a loan

    When you apply for a commercial loan, lenders assess your credit risk based on a number of factors known as the “5 C’s of Credit.” Understanding these factors will help you build your personal and company credit standing while ensuring your ability to obtain credit when your business needs it most.

    Here is a breakdown to help you better understand these factors and what all lenders look for:

     
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  • An Accounts Receivable Integration Framework
    This webinar discusses how to build a strategy and action plan for A/R transformation. You will learn how PrimeSource centralized credit & collections for more than 40,000 customers across 35 locations.
     
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  • Five Most Common Business Credit Mistakes
    How often has your accounts receivable department attempted to collect a payment, only to discover that a client has gone bankrupt, or cannot be compelled to pay an invoice? Each unpaid account is significant revenue lost. But there are ways to minimize this loss.
     
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  • The warning signs that preceded Carillion's fall

    Not since the financial crisis has the collapse of a business had such a political impact, but the warning signs had been flashing at Carillion for all to see, says Jane Fuller.

     
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  • Is Client Service at Risk of Being Displaced by Technology?

    Nowadays, money transfer services have taken on an entirely new complexion in the financial markets. For starters, traditional banks and the international money transfer services they offer to clients are no longer cost-effective, or efficient. In the United Kingdom, there are several ranking money transfer services used by clients, including World First and Transferwise. Contrary to popular belief, FinTech does not eliminate the face-to-face communication or human-voiced support of traditional international currency transfer services; it enhances the efficiency of the services to ensure a seamless experience for clients.

     
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  • BMC's 3Q Net Doubles; Lumber Price Hikes Help Sales Grow 7.3%
    BMC Stock Holdings, corporate parent of the nation's second-biggest full-service lumberyard, reported today its net income doubled to $18.4 million in the third-quarter from a year-earlier $9.2 million on a 7.3% increase in net sales to $881 million.Operating income actually dipped 1.2% to $33.3 million. The big change in net income stemmed largely from the fact that the company incurred a $12.5 million loss last year on extinguishment of debt but didn't report any such action this year.
     
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  • These Best Credit Practices in Brazil Will Keep You from Falling Downhill
    I’m often asked by many overseas creditors about where to start when establishing a business relationship with a customer in Brazil. My answer is that it often depends on whether you are going to grant credit, and if so, how much.
     
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  • Do You Have a Credit Policy for Your Organization?

    If your business lets your customers receive goods or services now in return for a promise to pay later, then your business grants credit. And you are not alone. Most businesses grant a credit to their customers, especially if their customers are other businesses (B2B—business-to-business). In fact, this is the most common type of credit offered in the business world and most of the credit offered in this way is unsecured.

     
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  • How to Better Know Your Customers

    As a credit manager, a critical part of your role is to identify who you can trust and to what extent you find their claims realistic. This is translated into knowing your customers well and defining whether they can pay you as agreed. Naturally, you may not have much information for new clients. The amount of credit awarded requires careful consideration when managing new and existing customers. Luckily, there is a method for evaluating how creditworthy they can be.

     
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  • Waiting too long to collect

    My colleagues think that my role is the worst possible in the company. This is mostly because my job involves calling customers for money. But I have a secret for you: I like making those calls. Rest assured, I’m not an extortionist who likes to torment poor souls. I just love what I do, especially knowing that I contribute to my organization’s success.

     
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Q and A (2)
  • How many collection calls should one make before referring a file to a collection agency?
    https://creditedu.org/knowledgecentre/index.php/site/qa/1

    The best way to determine this is by establishing a process whereby a collector goes through a series of steps in which h/she establishes the ability and willingness of a debtor to pay the overdue bills.  It’s quite possible to make a decision to escalate a file to a collection agency right after the very first call.  On the other hand, if there are reasons to believe that a cooperative debtor is experiencing temporary cash flow difficulties, then it may take repeated calls to work out a solution over time.

  • What is the best course of action to follow when dealing with accounts payable staff does not result in payment of an overdue account?
    https://creditedu.org/knowledgecentre/index.php/site/qa/2

    Dealing with A/P staff is part of the initial stage of collecting on a delinquent account.  Rightly, they deserve every due respect.  However, if a solution is not forthcoming, then one should resort to the principle of escalation.  This entails finding out who the A/P personnel answers to and whether that person (general manager, controller, director of finance, accountant, etc…) has the genuine decision making power or the authority to provide information as to the company’s ability to pay.

Wiki (4)
  • Liabilities
    https://creditedu.org/knowledgecentre/index.php/site/wiki/39
    Financial obligations or debt of an individual or a corporation, including unpaid taxes, salaries, accounts payable etc.
  • Taxation of accounts
    https://creditedu.org/knowledgecentre/index.php/site/wiki/73
    Application for court approval of the fees and disbursements of the trustee, interim receiver or legal counsel.
  • Garnishment
    https://creditedu.org/knowledgecentre/index.php/site/wiki/29
    A legal process whereby a creditor requires a third party to turn over a debtor's property, such as wages or bank accounts, to a creditor.
  • Receiver
    https://creditedu.org/knowledgecentre/index.php/site/wiki/62
    A person who has taken possession pursuant to a security agreement of substantially all of the inventory, accounts receivables or the other property of the debtor. Receiver also includes a person who has been appointed privately pursuant to a security agreement or by an order of the court for the protection or collection of property that is the subject of diverse claims, usually to seize and sell the property of the debtor.