德勤-信用风险管理
Credit Background
Thorough identification and accurate measurement of credit risk, supported by strong risk management can help improve the bottom line
Credit as a Facilitator
Credit risk management is important
– Credit is a facilitator of business growth and performance
– High business margins tend to attract lower quality clients and therefore higher risk profile to manage
Credit Strategy & Risk Tolerance
Credit Strategy Statement and Risk Tolerance
Coordination with Business Plan
Specific Quantment Review Methodology
Peer Average 51.3
Hypothetical
D Cash
DSOs
51.3
Q3 Sales
$261,201,000
\ Q3 A/R = $122,002,230 +$173,393,770
* Equals 295.4M/261.2M x 90(or number of days in sales period)
– Project Finance – Structured Transactions – Leases with Recourse
Derivatives Exposures
– FX, Interest Rate Risk, Commodities etc.
Collateral Risk
– Parent or Third Party Guarantees – Commercial and Standby Letters of Credit
Corporate Credit Risk
Companies are exposed to significant levels of credit risk emanating from different sources
Accounts Receivables Other Notes Receivables Buyer and Franchise Financing With Recourse Financing
– Clients (buyers) may be concentrated in selected industries and provide limited portfolio diversification opportunity
– Poor credit risk management resulting in negative impact to bottom-line is heavily penalized by markets
…..An uncertain and volatile economic environment significantly impacts this
ability …..The desire to grow and turn in
outstanding results has a tendency to put pressure on the checks and balances within businesses
– Note also that Critical Suppliers to the company may pose specific credit risk
DSO Impact … an example
Actual Q3 A/R Q3 Sales \ DSOs =
Company A $295,396,000 $261,201,000 124*
Value Proposition
Credit plays a critical role in “selling” products and services – Expands revenue opportunities with creditworthy, incremental customers – Utilizes innovative structures to support business relationships
Effective credit risk management limits credit losses and provides stable cash flows and earnings – Marketplace rewards companies exhibiting earnings and cash flow stability with higher P/E multiples – Marketplace penalizes credit induced volatility and “surprises” Raises questions about quality of management
The business strategies and objectives drive the establishment of credit policies and procedures. Measurement and reporting as well as the use of current technologies enhance credit decision-making and improve risk management. The entire process is continually re-evaluated and improved.