scott tillesen

www.techdata.com

Scott TillesenDirector of Credit

Imaging Partner Summit

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1. Tech Data Credit Philosophy1. Tech Data Credit Philosophy

2. Tech Data Financing Options 2. Tech Data Financing Options

3. Tips on How to Avoid Being Voted Off Credit Island

3. Tips on How to Avoid Being Voted Off Credit Island

June 9, 2005 AgendaJune 9, 2005 Agenda

Tech Data Credit Philosophy

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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

Tech Data Financing Options

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• Line of Credit

• Distribution Financing

• Leasing

• Assignment of Proceeds

• Letters of Credit

• Guarantees

Tech Data Financing OptionsTech Data Financing Options

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• Credit Application

• Review Payment Experience of other Distributorsand Vendors

• Review Business Credit Reports

• Review Tech Data Payment Experience and History

• Review Current Financial Statements

Line of CreditLine of Credit

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• Supplements your Tech Data open account

• Free financing supported by Tech Data - 21 to 60 days in most cases

• Tech Data Financing Partners - GE CDF, IBM Global Finance, and Textron Technology Finance

Distribution FinancingDistribution Financing

Can provide you with added credit availability and free financing.Can provide you with added credit availability and free financing.

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1. Tech Data customer applies and obtains a credit line with an approved finance company.

2. Customer places order with Tech Data (as usual).

3. Tech Data obtains electronic authorization from the finance company.

4. Finance company pays Tech Data.

5. Customer pays the finance company (free for 21 to 60 days in most cases).

Distribution Finance – How it WorksDistribution Finance – How it Works

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• GE Capital

• Tech Data OneLease (Citicapital/Citibank)

• American Express Leasing

• Alternative leasing companies with prior Tech Data approval

Leasing OptionsLeasing Options

Can conserve capital and match your customer’s cash flow. Quick response, Can conserve capital and match your customer’s cash flow. Quick response, simple documentation, commission on approved leases.simple documentation, commission on approved leases.

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• Tech Data customer and their qualified end-user agree to assign payments directly to Tech Data Corporation or Optimum Financial (for confidential sourcing)

• For commercial, state, and local government end users

• Escrow Access for Federal government purchases

Assignment of ProceedsAssignment of Proceeds

Enables large sales to qualified end users.Enables large sales to qualified end users.

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• Standby Letter of Credit (SLOC)More cost effective than a bank loan

• Documentary Letter of Credit

Letter of CreditLetter of Credit

Provides additional credit beyond your open account.Provides additional credit beyond your open account.

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• Personal Guaranty

• Cross Corporate Guaranty

GuaranteesGuarantees

Can enable the extension of credit beyond your open account.Can enable the extension of credit beyond your open account.

Tips on How to Keep From Getting Voted Off Credit Island

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1. Scrutinize purchasing

2. Maximize natural resources

3. Torment debtors

4. Amuse creditors

5. Live to fight another day

Attributes of Credit SurvivorsAttributes of Credit Survivors

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• Determine profitable minimize order size

• Avoid inventory through outsourcing

• Aggregate for improved pricing

• Put vendor perks into price or to your HQ

• Assess the hidden costs in the lowest price

• Reevaluate your specialty

Scrutinize PurchasingScrutinize Purchasing

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• Determine your risk appetite

• Examine and adjust you’re A/R portfolio risk profile

• Know your trade debt limitations

• Learn / know your bank debt limitations

• Quantify and qualify equity sources

• Unbundle the value you deliver to your customers

Maximize Natural ResourcesMaximize Natural Resources

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Collection success and value worsens with the age of the invoice.

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Billing Date

Invoice Due Date

CollectionDate

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• Tough times require a tough stand

• You’ve done your part remind them it is time to do theirs

• Develop a route of escalation

• Outsource what you can’t effectively handle internally

• Stick to your process

• Know when to pull the trigger

Torment DebtorsTorment Debtors

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• Share financial statements

• Announce management changes

• Explain ownership changes

• Describe mergers and acquisitions

• Know their internal processes and be sure they know yours

• Do not play “catch me if you can”

Amuse CreditorsAmuse Creditors

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• 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.

• Decide while you still have choices.

Live to Fight Another DayLive to Fight Another Day

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• On-line invoice inquiry at: www.techdata.com

• On-line customer statements

• TD Direct Pay (Internet Bill Presentation and Payment System)

Electronic ResourcesElectronic Resources

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Let us know if we can help.

Credit@TechData.com

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