The ICTF Global Credit Management Round Table
Discussion of Export Credit and Collection Challenges
Moderator:
Richard Clark, Director, Corporate Credit - Parker Hannifin Corp.
Panelists:
Nicole Harvey, Director of Credit & Collections - Parfums de Coeur
Fernando Mesia, Senior Vice President - Mercantil Commercebank
Tina Sorrels, Director of Credit - AJC International
November 17, 2015
Latin America
• After years of “strong currencies” in Latin
America, the past 12 months have seen
huge devaluations in Colombia, Mexico,
Brazil and Chile – the four strongest
economies in Latin America. Any
comments from the attendees? How are
you handling the situation?
QWIZDOM
Latin America cont…
• How many members have increased their
credit department staff handling Latin
America (in the US or Latin America) in
the past 12 months?
Latin America cont…
• There are a number of challenges having
Distributors/Resellers pay on time per
their signed contracts with us. Is anyone
else experiencing the same
credit/accounts receivable challenges,
and how are you dealing with very slow
payers in Latin America?
Argentina
• Is anyone having any difficulties
obtaining payment from their customers
in Argentina?
QWIZDOM
Brazil
• Has the downgrade of Brazil
below the Investment Grade
Level reduced availability on the credit
insurance side for Brazil? Has it made any
company be more conservative when
approving/increasing a credit line in
Brazil?
Brazil cont…
• With the rapid devaluation of currency,
recession and potential overthrow of top
government officials in Brazil, what
changes are being made to selling in the
country?
Cuba
• We get a lot of questions about when we
will start doing business in Cuba. Any
insight into when Congress will lift the
embargo? Are there any public sources
of commercial data in Cuba?
Ecuador
• Ecuador – the country which
cannot devalue but has all sorts of other
issues – how many members are using
more caution granting credit in this
country?
QWIZDOM
Honduras
• What are people seeing regarding the
direction of the Honduran economy?
Mexico
• Question on exporting to a customer in
Mexico utilizing a commercial Letter of Credit and
using rail as the mode of transportation.
We recently found it impossible to obtain a discrepantfree Letter of Credit to export from U.S. to Mexico
utilizing a Railroad Company as transportation to the
border in Texas with the customer taking ownership at
the border to transport in Mexico to their place of
business. The biggest issue is probably the inflexibility of
our customer and the customer refusing to waive
discrepancies in the Railroad Company waybill. Railroad
Company refused to alter or change the railway bill.
• Discrepancies included:
• 1. Rail Destination on railway bill incorrect because
we were delivering to the border in TX only and not to
the final destination.
• 2. Method of payment could not reflect “prepaid”
because Railroad Company’s coding for the freight
being split by us and our customer was “11” (AAR
Accounting Rule 11).
• 3. No indication of goods received for shipment on
the railway bill.
• 4. Product was listed on railway bill according to the
Railroad Company’s coding system and it was not close
to the type of product we were selling.
• 5. No signature on the railway bill.
• In conversations with the bank, they refused to
accept a railway bill that was unsigned even
though we provided the bank with a letter from a
VP at the Railroad Company stating that the
railway bills are never signed.
• We attempted to use Certificate of Receipt
instead of the railway bill, however, the bank and
customer would not agree.
• We attempted to use a warehouse bill of lading
instead of the railway bill and it was not agreed
to.
• The note section of the railway bill was used to
address the 5 discrepancies above by stating the
destination, freight prepaid, etc.
• Customer claimed they are unable to
utilize a Standby L/C.
• Any suggestions on how to make this
work in the future? Suggestions on other
secured ways to sell to such customers?
Venezuela
• Are you selling to any Venezuelan
companies that are experiencing delays
on payments released by
CADIVI/CENCOEX? If so, have you been
able to work with the company through a
Collateral or Guarantee? What other
options have you tried?
China
• How serious is the slowdown
in the Chinese economy? Have we
passed the worst of it? What are your
observations from a credit extension and
payment stand point?
QWIZDOM / QWIZDOM
Africa
• I am very interested in anything
concerning Africa - how to secure
operations / credit in Africa; techniques
that are specific there; pitfalls and
opportunities, etc…
General Questions
• We are all aware of the downside of the
drop in oil prices, as energy-related
companies have cut back on purchases
and Capital Expenditures. Who is in an
industry that has benefitted from the
price decreases, and where (country or
industry) has your company benefitted?
General Questions cont…
• How do you take into account the
appropriate risk for doing business
overseas? Do companies account for the
risk by enacting higher hurdle rates for
projects or adding a risk premium to
account for the sovereign/country risk?
General Questions cont…
• With international markets going through so
much volatility, credit managers have to
constantly monitor their international
customers. In some countries, it’s not the
customers themselves, but the country risk that
concerns us. A couple of customers in high risk
countries have trouble sending money outside of
the country (Greece and Serbia). Occasionally,
we are asked if they can wire us money from an
account in another country. The account could
be in their name or in another company’s
name. What type of due diligence is required on
our part? Are there any legal considerations that
come into play?
General Questions cont…
• Can anyone report good or bad
experiences they’ve had with supplychain finance programs?
General Questions cont…
• I would like to ask about the best practices for
protecting your A/R department from
fraudsters. Protection in this instance would
be from those criminals that monitor email
transmissions in an attempt to then send an
email posing as your company advising your
customer that wire instructions have
changed. This would also work in reverse
where they pose as your customer requesting
a refund be sent to a new bank.
General Questions cont…
• We rely on credit insurance; however,
there are some countries we do business
in, like Pakistan, which insurers will not
insure regardless of the strength of the
buyer. L/C’s do not work in our world
(Telecom). What are some alternatives?
General Questions cont…
• With the tightening of banking regulations
around the world, are people finding it
harder and/or more expensive to get letters
of credit?
QWIZDOM
• Is anyone using Bank Payment Obligations
(BPO) and, if so, did it work the way you
thought it would? Was it an efficient and
secure way to get paid? Do you need special
software?
General Questions cont…
• What is best practice for foreign
customers who do not withhold taxes
from payments? For those that do
withhold, what documentation do you
require for the deduction to be valid?
General Questions cont…
• How are panelists and peers utilizing
interest penalties for late
payments? What basis is used to
calculate the interest amount? Does the
calculation differ in countries where the
country’s internal interest rate is higher
than in the US?
THANK YOU FOR YOUR PARTICIPATION!!!