COLLATERAL RISK MANAGEMENT INC.
Credit and financial managers are asked to make judgments each day in order to properly balance sales volume with timely collections. Such decisions must consider what a company stands to earn versus what could be lost. Although prudence suggests that credit not be extended to businesses that might become credit risks, it is not always possible to disregard the profits that will be earned in selling to them. In today's environment, an unsecured creditor can generally expect little, if any recovery from a customer failure. However, such customers represent an investment and an opportunity, which can be preserved or capitalized on using creative techniques.
The creditor support services offered by Collateral Risk Management, Inc. can make the credit decision considerably easier. By process and protection they allow more product to be shipped than credit limits or conditions might otherwise permit. The featured services such as the Controlled Distribution Service, Distribution Reporting Service, and the Comprehensive Business Survey offer the credit manager a mix including on-site customer evaluations, blueprinted solutions to various credit issues, managed remittances, and inventory control, supported by bailment-like segregation.
Collateral Risk Management can provide the information and controls necessary to effectively make the judgment that properly balances volume with safety.
CREDITOR SUPPORT SERVICES
Collateral Risk Management's creditor support services allow the credit manager to keep the inventory supply flowing, reducing normal risks and worries associated with transitional companies. The services offered help a supplier to:
Maintain adequate inventory levels at marginal, troubled, or rapidly growing customers.
Safely increase credit limits to facilitate marketing efforts.
Build customer loyalty by safely extending credit terms, where otherwise not possible.
Extend secured credit terms to customers in Canada and Europe
Analyze troubled, workout or bankrupt situations and maximize recoveries.
If you have honest, diligent, but undercapitalized or rehabilitating accounts with credit requirements, or need bankruptcy or workout support, we can assist rapidly in answering those needs. A call to Collateral Risk Management may provide options you never thought you had.
CONTROLLED DISTRIBUTION SERVICE™
The premier service offered by Collateral Risk Management: Controlled Distribution Service, features on-site physical control and monitoring of inventory levels. This program allows the credit manager to ship larger quantities of goods to customers than would otherwise be possible. A creditor can opt for shipping with the title to the goods retained, or where it is passed, but where the terms are customized, or “Paid as Sold,” supported by a Purchase Money Security Interest or its equivalent. It is a proven system of disciplined customer cash flow, while achieving incremental distribution and reducing credit exposure.
This program is accomplished by creating a “safe harbor” on the customer's premises that is leased to and controlled by Collateral Risk Management. Withdrawal of the goods can only occur upon authorization, which can be given in advance in the form of a “withdrawal limit” and specific payment instructions, i.e. payment on Monday for the prior week's withdrawals.
Though the program is designed to allow continuing relations with the marginal or troubled customer, it is also flexible enough to provide protection in a supplier's unanticipated investment in customer-shipped goods. These can include such nuances as having to ship early to avoid adverse weather conditions or labor problems, to provide "just-in-time" stocking, or to enhance a security position where multiple creditors are involved.
DISTRIBUTION REPORTING SERVICE
When the need for physical dominion of inventory is not desired or required, Distribution Reporting Service can provide accurate and timely information to facilitate evaluation of the customer relationship. The Distribution Reporting Service works like the Controlled Distribution Service in discipline, but without the on-site physical controls, based upon objectives set by the creditor which establish guidelines and procedures to be utilized by the customer. The disciplines of timely reporting and payment for goods are monitored for adherence and customer performance, and audits are performed at periodic intervals to ensure accuracy.
REACTIONRESPONSE
In the foregoing services, trained account coordinators at Collateral Risk Management monitor daily or weekly reporting from the customer location. When "red flags" or other unfavorable activity occurs, Collateral Risk Management takes action through ReactionResponse. An immediate ReactionResponse fax message advises of the detected problem, the alternatives for correction and protection, and the action Collateral Risk Management is prepared to immediately implement. This can include immediate audit team visitation to examine and confirm the situation, curtailment of credit, or transfer of remaining inventory.
COMPREHENSIVE BUSINESS SURVEY
Information is the “lifeblood,” that a credit manager uses to make continuing decisions. A pipeline to mercantile credit reporting agencies and trade credit groups will serve normal needs, together with the manager's own payment experience and customer communication. But when hands-on, intensive analysis of a customer's condition and standing is required, Collateral Risk Management's Comprehensive Business Survey is employed for essential and decisive intelligence.
Nationally recognized for its merit in troubled situations, the Survey is performed by a two-person team and generally takes 1 to 2 days at the customer's location to obtain both quantitative and qualitative information on viability and positioning of the subject. In addition to both historical and current financial data, other areas explored include: collateral, and its relationship to superior lien positions; status with lenders and other suppliers; current nature of taxes and creditor problems, and issues of potential insolvency. The report includes recommended alternatives specific to the customer, including ways to shore up, expand or dissolve the existing relationship, in accordance with the realities of risk uncovered.
For further information on Collateral Risk Management, Inc., call us at (972) 231-6525, or E-mail c/o George A. Thorson, EVP at gthorson@collateralrisk.com.