Covid 19 Credit Risk Control
John G. Salek, President, Revenue Management Associates, LLC
Revenue Management Associates (RMA) helps companies optimize their use of trade credit to increase revenue and margin, control exposure to bad debt, improve cash flow, and reduce operational cost
- 30 years experience in Invoice to Cash solutions development working in a broad range of industries with over 250 clients
- Author of Accounts Receivable Management Best Practices published by John Wiley
- B. S. Business Administration from the University of Connecticut, MBA in Finance from The Tuck School of Business at Dartmouth College
The economic downturn caused by the Covid 19 virus will force most companies to sell on credit to financially weak customers in order to survive. This is a huge, unwelcome, risky change. How can a company do this and survive?
Success in generating cash will be driven by the following actions/programs:
- Define, agree and articulate a Corporate Posture for selling to financially weak customers on credit. How accommodating can you be, especially with long-term customers?
- Identify and review your high-risk customers and the degree of risk
- Have the tough conversations with your large and high-risk customers so you understand their situation and they understand yours
- Implement a program of much closer scrutiny of customer Accounts Receivable balances and orders, with a much higher degree of customer contact
- Definition of the Company Posture to the marketplace
- Identification of high-risk customers
- Development of a treatment protocol for high risk and large customers/groups of similar customers
- Intensive application of the treatment protocols
Course Level - Intermediate
Who Should Attend
Members of the Finance community responsible at some level, for managing a firm’s AR assets (CFO’s, Controllers, Treasurers, Credit Directors/Managers).
Why Should You Attend
To avoid a catastrophic revenue decrease, you will have to sell to financially weak customers whose credit rating may be far below your current acceptable risk standards. Inevitably, you will suffer larger bad debt losses than in the past. Financial strength and cash reserves vary widely among companies. How long can your company survive with drastically reduced revenue and cash inflow?
The answer depends on two key influences:
- How much can expenses and cash outflow be reduced?
- How much revenue and cash inflow be generated in a severely contracted economy?
Generating revenue will be a challenge, with customers demanding that you sell on credit. Generating cash from those sales will be an extremely difficult task. Learn key principles and actions to help you generate breakeven (or better) sales, then collect much of the cash from those sales!