Sales and credit, one team ?
Reality or myth ?
Topics:
•
•
•
•
•
•
Chevron Phillips Chemicals at a glance
Product range
EMEA Credit Organization
Scoring System
Collection Activities
Conclusion
Company formed in July 2000
About Us
•
•
•
•
Manufacturer of petrochemicals that are essential to
manufacturing over 70,000 consumer and industrial
products
At end of 2012 : $9.4 billion in assets and more than $13.3
billion in annual revenues
Trusted supplier to customers
in more than 125 countries
A highly educated & diverse
workforce of approximately
5,000 employees working on
five continents across the globe
Manufacturing Locations
Belgium
Saudi Arabia
Qatar
South Korea
United
States
China
Singapore
Colombia
Global Significant Projects – Middle East
SAUDI POLYMERS COMPANY – SAUDI ARABIA
Q-CHEM II – QATAR
2012 Sales & Assets
End Uses
•
•
•
•
•
•
•
•
•
•
•
Adhesives and Sealants
Agricultural
Appliances
Automotive
Building and Construction
Chemical Manufacturing
Dry Cleaning
Electronics
Healthcare
Household
Imaging and Photography
•
•
•
•
•
•
•
•
•
•
•
Industrial
Lubricants
Oil, Gas and Mining
Packaging
Paint and Coatings
Personal Care and Cosmetics
Pharmaceuticals
Pipe
Plastics and Rubber
Solar Panels
Textiles
EMEA Credit Organization & Strategy
•
•
•
•
•
•
•
•
Team of 4 people
Global exposure control via SAP FSCM
Unique financial scoring (implied rating)
Best practice sharing with US & Asian colleagues
Involve sales in collection activity
Tight follow-up on overdue invoices, order blocking when invoice 5
days late
Sales person takes ownership of unpaid debt
Monthly meeting with product line manager on default
accounts
Implied rating
Uniform rating system on corporate level
Investment Grade
Speculative Grade
Moody's Rating
Aa or Aaa
A
Baa
Ba
B
Caa
S&P Rating
AA or AAA
A
BBB
BB
B
CCC
Very
strong
Strong
Good
Marginal
Weak
Very weak
1. EBIT Int Cov.
*(x)
8.8 +
8.7 - 5.4
5.3 - 3.1
3.0 - 1.6
1.5 - 0.5
< 0.5
2. Funds Flow/TD*(%)
51 +
50.9 - 38 37.9 - 25
24.9 - 14.3 14.2 - 7.7
< 7.6
54.4 - 67.9
68 - 82
> 82
< 38
37.9 - 43.8
43.9 54.3
4. Debt / EBITDA
(x)
<1
1-2
2-3
3-6
6-9
>9
5. 4-VARIABLE Z-SCORE
>7
6.9 - 6.4
6.3 - 5.6
5.5 - 4.7
4.6 - 3.7
< 3.6
3. TD / TC (%)
12
*When scores fall in more than one category, give more weight to the Coverage ratios.
EMEA Customer Portfolio Profile
CCC
Speculative grade : 22%
Not rated
Secured
B
AAA
AA
BB
A
BBB
Investment grade : 70%
Investment grades : AAA, AA, A & BBB
Speculative grades : BB, B & CCC
Collection Activities
•
Weekly dunning letters by email or fax
•
Mid-month statement of account by email (all outstanding
invoices are mentioned)
•
SAP Credit check indicating overdue situation when new order
is entered
14
Collection Procedure
Overdue of:
5-7 days
• Treasury/Credit contacts the customer by email (dunning letters are
sent automatically through the SAP system)
• Treasury/Credit sends email to CSR with copy to sales person
• CSR to contact the customer and inform Treasury/Credit/Sales person
>10 days
>3 weeks
>8 weeks
15
• Treasury/Credit sends email to sales person with copy to CSR and credit
manager
• Sales person to contact the customer and inform Treasury/Credit/CSR
• Credit and treasury manager will involve legal department after
agreement with responsible sales person and product line manager
EMEA Credit and Collection KPI’s
Key Performance Indicators EMEA (year 2012)
•
•
•
•
•
DSO
38 days
Delinquency
1 day
Collection Efficiency
96 %
Overdue at month-end < 3%
Annual write-off
< 0.1 Pro Mile
Tools of Success
•
•
•
•
•
17
Strong communication and mutual support between credit
and sales
“sales are our eyes and ears on the field”
Involvement of sales in the collection activity and ownership
of unpaid debt
Tight follow-up on overdue invoices
Control on payment terms > risk control
Financial training provided by credit to
sales’ force
Sales & Credit = one team & it works!