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www.techdata.com
Scott TillesenDirector of Credit, SMB Accounts
SMBAccess Credit Services Presentation
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1. Tech Data Credit Philosophy1. Tech Data Credit Philosophy
2. Tips on How to Avoid Being Voted Off Credit Island !!!
2. Tips on How to Avoid Being Voted Off Credit Island !!!
April 11, 2006 AgendaApril 11, 2006 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
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. Utilize financing options
6. 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
• Assess the hidden costs in the lowest price
• Reevaluate your specialty
Scrutinize PurchasingScrutinize Purchasing
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• Determine your business risk appetite
• Plan for sales, asset, and financing growth
• Know your trade debt limitations
• Determine your bank debt limitations
• Quantify and qualify equity sources
• Un-bundle the value you deliver to your customers
Maximize Natural ResourcesMaximize Natural Resources
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• You’ve done your part remind them it is time to do theirs
• Have a strong credit application
• 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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Collection success and value worsens with the age of the invoice.
Billing Date
Invoice Due Date
CollectionDate
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• Share financial statements
• Announce management & ownership changes
• Describe mergers and acquisitions
• Know their internal processes and be sure they know yours
• Communicate thru email and website
• Do not play “catch me if you can”!!!
Amuse CreditorsAmuse Creditors
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• Supplier Credit Limits
• 3rd Party Financing
• Leasing
• Assignment of Proceeds
• Letters of Credit
• Guarantees
Utilize Financing OptionsUtilize Financing Options
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• Submit a completed Credit Application
• Payment experience of other Distributors and Vendors is reviewed
• Credit Reports are reviewed
• Payment experience and history is reviewed
• Current Financial Statements are studied
Financing Option #1: Supplier CreditFinancing Option #1: Supplier Credit
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1. Reseller applies and obtains a credit line with an approved Finance Company.
2. Reseller places order with Distributor (as usual).
3. Distributor obtains electronic authorization from the Finance Company and ships the order.
4. Finance company pays Distributor.
5. Reseller pays the Finance Company (free for 30 to 60 days in most cases).
Financing Option #2: 3rd Party FinancingFinancing Option #2: 3rd Party FinancingCan provide you with added credit availability and free financing.Can provide you with added credit availability and free financing.
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• Supplements your Tech Data open account
• Free financing supported by Tech Data and certain Vendors
- 30 to 60 days in most cases
• Tech Data Financing Company Partners: - GE CDF, IBM Global Finance, and Textron Technology Finance
3rd Party Financing thru Tech Data3rd Party Financing thru Tech Data
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• Reseller presents End User to Leasing Company
• Leasing Company approves and documents the deal
• Leasing Company pays Reseller or Distributor
– Tech Data Leasing Partner options: GE Commercial Distribution Finance; Tech Data OneLease (Citicapital/Citibank); American Express Leasing; and others with prior approval.
Financing Option #3: LeasingFinancing Option #3: Leasing
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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• Reseller and their qualified End-User agree to assign payments directly to Distributor.
– Tech Data offers an alternative payee: Optimum Financial
• For commercial, state, and local government End Users
• Escrow Access for Federal government purchases
Financing Option #4: Assignment of ProceedsFinancing Option #4: Assignment 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
– Stands as secondary support for payment
• Documentary Letter of Credit
Financing Option #5: Letter of CreditFinancing Option #5: Letter 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
Financing Option #6: GuaranteesFinancing Option #6: Guarantees
Can enable the extension of credit beyond your open account.Can enable the extension of credit beyond your open account.
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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.
• Windows of opportunity don’t stay open long.
• 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 Resources at Tech DataElectronic Resources at Tech Data
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