PanelistShawnL.Ross
Director,CreditControllerAnsellHealthcareProducts
PanelistMatthewDebbage,COO
CreditsafeGroup
CreditTodayPerspectives:ManagingCreditDuringaGlobalCrisis
Panelist
DanielSchobel,VP
CofaceNorthAmerica
Moderator
DavidSchmidt,Editor
CreditToday
April30,2020
Whichcountriesandindustrieshavebeenthehardesthitandwhichwill
emergeinthebestshape?
3
GLOBALPROSPECTS
Coface’s world GDP estimates and forecasts Annual average, %
GlobalexportvolumesYoY%change
-1.7
4.3
3.22.5 2.7 3.0 3.0
2.3
3.3 3.2
2.5
-1.3-2
-1
0
1
2
3
4
5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Sources: IMF, National authorities, Datastream, Coface
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2020 Forecast:-4,3
Sources: CPB, Datastream, Coface
2019:-0.4%
2011-2018:2.9%
2003-2010:5.1%
TheSharpestDownturnSincetheGreatRecession
COFACE,THEMOSTAGILEGLOBALTRADECREDITPARTNERINTHEINDUSTRY
4
3% 3% 4% 5% 5% 7% 8% 10% 10% 11% 11% 11% 12% 12% 13% 14% 15% 17% 17% 18% 19%22%
33% 33% 33%39%
8%
18%
37%
25%
-10%
0%
10%
20%
30%
40%
Finl
and
Norw
ay
Swed
en
Kore
a
Portu
gal
Sout
h Af
.
Turk
ey
Sing
apor
e
Taiw
an NZ
Germ
any
Cana
da
Japa
n
Braz
il
Aust
ralia
Polan
d
Fran
ce
Belg
ium
Icelan
d
Italy
Denm
ark
Spain UK
Neth
er.
HK US
Asia
Pac.
Wes
t. Eu
rope
North
Am
e.
Wor
ld
2020 (January forecasts)2020 (March forecasts)
Sources: National authorities, Coface
GLOBALPROSPECTS EconomicImpactofCovid-19ontheLargestEconomies
COFACE,THEMOSTAGILEGLOBALTRADECREDITPARTNERINTHEINDUSTRY
Covid-19ImpactScore
C – Moderate Impact
64%
D - High Impact15%
E - Significant Impact15%
B - Low Impact6%
A - Very Low Impact1%
Almost 30% of businesses in the United States are facing imminent
catastrophic financial disruption.
• GDP-4.8%
• ConsumerSpending-7.6%
• HealthcareSpending-23%
• InvestmentsinEquipment-15%
• Exports-8.7%
• Imports-15.3%
• Unemployment+500%
USQ1Trends
Howmuchworsewillthesecondquarterbe?
Whatareyouseeingintermsofglobalpaymenttrends?
SupplyChainImpact
Source:“B2BPaymentsCovid-19ImpactReport”-pymnts.com&AmericanExpress
8
The“New”Normal
Int’lTeamOrganization
• Staggeredlocationsandhours• Companiesre-definingrolesandfunctions• Uncertaintyamongteamsregardingresponsibilities• Workrestrictionsplacelimitationsonemployeesandabilitytobeagile• Staffingandtrainingissues
B2BOperations
• Targetcontactsareevenhardertohit• Globalaccountsaremoredifficulttoalignduetoregional/sovereignchallenges• Methodsofcreditestablishmentaredictatedbysovereigns• Companiesarebeingchallengedwithdevisingmorecreativewaystobuildbusinesswhilemitigatinglosses
9
• WhoarethefragilecustomerstrulyaffectedbyCOVID-19?
• Whoarepretendingtobeaffected?
UnderstandtheImpactonCustomers
• Paymenttermextensions–asenseofentitlement
• Corporateperformanceresponsibilityshiftsfrom“mycompanytoyours”
MakeSurethereIsaGoodReasontoChangethe
Rules
• Differentlevelsofimpactrequiredifferentreactions
Knowingcountryregulationsandrestrictionsare
critical
Whatshouldinternationalcreditmanagersbedoingnowandwhatshouldtheypreparetodoaseconomiesemergefromtheshutdowns?
Covid-19ImpactRiskMatrix–ExampleNetherlands
Creditscorebandings
COVID’19im
pactindicator
RiskassessmentmatrixDistributionof2.6MDutchcompanies
=1.1Mcompanies
750Kcompanies
600Mcompanies
150Kcompanies
goodbad
low
high
Highrisk-lowimpactMonitor
Highrisk–highimpactRe-Evaluate
Lowrisk-highimpactSupport
Lowrisk-lowimpactIncrease
Creditscorebandings
COVID’19im
pactindicator
Credit-managementstrategycanvasDistributionofcompaniesintermsofCOVID-impactandCredit-risk
Putthesecustomersonwatch-lists.Increasedebtormonitoring.Establishmorestrictdeliveryandpaymentconditions.Credit-checkallordersbeforeshipping.
Maximizedebtormonitoring.Reduceandeliminateamountsoutstanding.Re-Evaluatecreditfacilitiesorinstallnewpayment-conditions.Terminatecommercialactivitiesontheshort-term?
Supportandnurturethesecustomersandmaintainnormaltermsandconditionsasmuchasyoucan.Monitordebtors.Buildstrongrelationshipscommercially.
Increasecash-flowandcommerciallytargetthesecustomers.Increasebusinessactivityandcommercialactions.Monitordebtorscarefullyalways.Keepnormaltermsandconditionsasmuchasyoucan.
Actiontemplates(examples):
goodbad
low
high
1
2
3
4
Implementactions&buildaCMcontinuityplan
Actiontemplates(examples):
WhoShouldYouSellTo?1stQuadrant-No• Tryingtoselloutsidetheirnormalindustry
• Iftheycouldonlygetproducttosell,thiswillsavethem
2ndQuadrant-Restricted• Iftheyarewillingtopaycashinadvance
• Canbringtheiraccounttoacurrentstatus
3rdQuadrant-Caution• Keepingaccountcurrentwithinpaymentterms
• Prepayingtocreatecapacity• ProvidesfinancialsonlywithNDA
4thQuadrant-Yes• Publiccompanywithconsistentreportingandsatisfactoryagencyratings
• Goodpaymentbehaviorandcommunication
• Gettingapictureofacustomerscurrentfinancialstrengthisthegoldstandard
• Iftheyaren’twillingtoshowthemtoyou,askiftheywillshowthemtoa3rdparty
GetFinancials!
• Databasegeneratedreportsareoflittleworthinourcurrentsituation• Pastpaymentscanprovidelittleindicationofabilitytopayinthisdramaticallychangedenvironment
Utilizefreshlyinvestigatedreports
• Notallindustriesarecurrentlyinsurable,butmanystillare.• Reachouttoanagenttodiscussifyoursis.• WordofCaution,yougetwhatyoupayforaswithanytypeofinsurancepolicy
Lookatinsuringyourreceivables
14
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GLOBALPROSPECTS BestPracticesforRiskRemediation
COFACE,THEMOSTAGILEGLOBALTRADECREDITPARTNERINTHEINDUSTRY
OvercomingOrganizationalChallenges
ForAll
BETHESOUCEofinformation
OwntheRESOURCESforaccessingdata
ForFinance
Top10customersbypurchases
Top10customersbyARandPastDue
ForSales
Top10customersbycreditholds
Topcustomersbyserviceissue
and/orcomplaints
ReportDistribution
Providedashboardsthatcombineallreporting
Sharereportsacrosscompanyresponsibilities
Acrossregions:sharepractices,formatsandresources
Questionsweareunabletoanswerduringthewebinarwillbeansweredoff-lineanddistributedtoallattendees,aswillcopiesofthisslidedeck.
Weappreciateyourattendingthisevent.CreditTodayplanstocontinuethesediscussionswithotherleadingcreditindustryexperts.ThenextwebinarwillbeMay11th.Wewillbesendingannouncementsshortly.
FormoreinformationaboutCreditTodaypleasegotocredittoday.net.YouwillfindseveralarticlesaboutdealingwithCovid-19inourpubliclistingsaswellaslinkstoourearlierwebinaronApril6th.
Questions?Ifyouwishtocontactanybodyonourpanel,youmaydosoviaemail:
• MatthewDebbage– [email protected]
• ShawnL.Ross– [email protected]
• DanielSchobel– [email protected]
• DaveSchmidt– [email protected]
