Credit Today Perspectives: Managing Credit During a Global Crisis
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Credit Today Perspectives:
Managing Credit During a Global Crisis
Panelist Panelist
Shawn L. Ross
Daniel Schobel, VP
Director, Credit Controller
Ansell Healthcare Products Coface North America
Panelist Moderator
Matthew Debbage, COO David Schmidt, Editor
Creditsafe Group
Credit Today
April 30, 2020
Which countries and industries have
been the hardest hit and which will
emerge in the best shape?
GLOBAL PROSPECTS The Sharpest Downturn Since the Great Recession
Coface’s world GDP estimates and forecasts Global export volumes
Annual average, % YoY % change
5 20%
4.3
2003-2010:
4 15%
3.3 5.1%
3.2 3.2
3.0 3.0 10% 2011-2018:
3 2.5 2.7 2019:
2.9%
2.5 5% -0.4%
2
2.3 0%
1
-5%
2020 Forecast:
0 -10% -4,3
-1 -15%
-1.7 -1.3 -20%
-2
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sources: IMF, National authorities, Datastream, Coface Sources: CPB, Datastream, Coface
COFACE,
3 THE MOST AGILE GLOBAL TRADE CREDIT PARTNER IN THE INDUSTRYGLOBAL PROSPECTS Economic Impact of Covid-19 on the Largest Economies
39%
40% 2020 (January forecasts) 37%
33% 33% 33%
2020 (March forecasts)
30%
25%
22%
19%
20% 17% 17% 18% 18%
14% 15%
12% 12% 13%
10% 10% 11% 11% 11%
10% 7% 8% 8%
4% 5% 5%
3% 3%
0%
-10%
Finland
Taiwan
Australia
US
Norway
Portugal
NZ
Japan
Italy
UK
HK
West. Europe
World
Canada
Denmark
Asia Pac.
Brazil
North Ame.
Turkey
France
Spain
Germany
Belgium
Nether.
Iceland
Sweden
Singapore
South Af.
Korea
Poland Sources: National authorities, Coface
COFACE, THE MOST AGILE GLOBAL TRADE CREDIT PARTNER IN THE INDUSTRY
4Covid-19 Impact Score
D - High Impact
15%
E - Significant Impact
15%
Almost 30% of
businesses in the B - Low Impact
United States are 6%
facing imminent A - Very Low Impact
catastrophic financial 1%
disruption.
C – Moderate Impact
64%US Q1 Trends -4.8% • GDP -7.6% • Consumer Spending How much worse -23% • Healthcare Spending will the second -15% • Investments in Equipment quarter be? -8.7% • Exports -15.3% • Imports +500% • Unemployment
What are you seeing in terms of global payment trends?
Supply Chain Impact Source: “B2B Payments Covid-19 Impact Report” - pymnts.com & American Express 8
The “New” Normal Understand the
• Who are the fragile
customers truly affected
Impact on by COVID-19?
Customers • Who are pretending to be
affected?
Int’l Team
Organization B2B Operations
Make Sure there • Payment term extensions
– a sense of entitlement
•Staggered locations and hours •Target contacts are even Is a Good Reason
• Corporate performance
•Companies re-defining roles harder to hit to Change the responsibility shifts from
and functions •Global accounts are more Rules “my company to yours”
•Uncertainty among teams difficult to align due to
regarding responsibilities regional/sovereign challenges
•Work restrictions place •Methods of credit
limitations on employees and establishment are dictated by
ability to be agile sovereigns Knowing country
•Staffing and training issues •Companies are being
challenged with devising more regulations and • Different levels of impact
creative ways to build business restrictions are require different reactions
while mitigating losses
critical
9What should international credit managers be doing now and what should they prepare to do as economies emerge from the shutdowns?
Covid-19 Impact Risk Matrix – Example Netherlands
Risk assessment matrix
Distribution of 2.6M Dutch companies
low
750K 1.1M
=
companies companies
COVID’19 impact indicator
150K 600M
companies companies
high
bad good
Credit score bandingsImplement actions & build a CM continuity plan
Credit-management strategy canvas
Action templates (examples): Distribution of companies in terms of COVID-impact and Credit-risk Action templates (examples):
low
Put these customers on watch- Increase cash-flow and
lists. Increase debtor monitoring. commercially target these
Establish more strict delivery and High risk - low Low risk - low impact customers. Increase business
1
payment conditions. Credit-check 3 impact Increase activity and commercial actions.
COVID’19 impact indicator
all orders before shipping. Monitor Monitor debtors carefully always.
Keep normal terms and conditions
as much as you can.
Maximize debtor monitoring. Support and nurture these
Reduce and eliminate amounts customers and maintain normal
outstanding. Re-Evaluate credit High risk – high impact Low risk - high terms and conditions as much as
4 Re-Evaluate impact 2
facilities or install new payment- you can. Monitor debtors. Build
conditions. Terminate commercial Support
strong relationships
activities on the short-term? high commercially.
bad good
Credit score bandingsWho Should You Sell To? 1st Quadrant - No 2nd Quadrant - Restricted • Trying to sell outside their • If they are willing to pay cash in normal industry advance • If they could only get product to • Can bring their account to a sell, this will save them current status 3rd Quadrant - Caution 4th Quadrant - Yes • Keeping account current within • Public company with consistent payment terms reporting and satisfactory • Prepaying to create capacity agency ratings • Provides financials only with • Good payment behavior and NDA communication
To cha
•Click
GLOBAL PROSPECTS Best Practices for Risk Remediation •Click
•Write
presen
•Click
• Getting a picture of a customers current financial strength is the gold
standard
Get Financials! • If they aren’t willing to show them to you, ask if they will show them to a
3rd party
Utilize freshly • Database generated reports are of little worth in our current situation
• Past payments can provide little indication of ability to pay in this
investigated reports dramatically changed environment
• Not all industries are currently insurable, but many still are.
Look at insuring • Reach out to an agent to discuss if yours is.
your receivables • Word of Caution, you get what you pay for as with any type of insurance
policy
COFACE, THE MOST AGILE GLOBAL TRADE CREDIT PARTNER IN THE INDUSTRY
14Overcoming Organizational Challenges
Report
For All For Finance For Sales
Distribution
Provide
BE THE SOUCE Top 10 Top 10 dashboards that
customers by customers by
of information combine all
purchases credit holds
reporting
Top customers
Own the Top 10 by service issue Share reports
RESOURCES for customers by AR across company
and/or
accessing data and Past Due responsibilities
complaints
Across regions:
share practices,
formats and
resourcesQuestions?
Questions we are unable to answer during the webinar If you wish to contact anybody on our
will be answered off-line and distributed to all
attendees, as will copies of this slide deck.
panel, you may do so via email:
• Matthew Debbage
– Matthew.Debbage@creditsafe.com
We appreciate your attending this event. Credit Today
plans to continue these discussions with other leading • Shawn L. Ross
credit industry experts. The next webinar will be May – shawn.ross@ansell.com
11th. We will be sending announcements shortly.
• Daniel Schobel
– daniel.schobel@coface.com
For more information about Credit Today please go to • Dave Schmidt
credittoday.net. You will find several articles about – dave@credittoday.net
dealing with Covid-19 in our public listings as well as
links to our earlier webinar on April 6th.You can also read
