NACM Oregon
Business Credit Journal January/February 2014
Customer Payment—Term-Pushback Strategy (Formal and One Offs): How Customers (Solvent and Otherwise) Are Unilaterally Extending Credit Terms and the Credit Team’s Response—Part II
by Scott Blakeley, Esq.
Customer Wins the TPS Battle
Customer-Sponsored Enhancements to Aid Vendors Participating in TPS Supply-Chain Finance Program (SCFP) and/or the Trade Structure Finance Program (TSFP) These are asset-based lending programs developed to facilitate financially efficient supply chains for customers struggling with conflicting pressures to improve payment terms, reduce costs, and improve cash flow. The goal of both SCFP and TSFP is to maximize the financial efficiency of the supply chain by reducing the cash tied up in working capital for both customers and vendors. Both programs are structured so that the bank immediately pays the vendor for the invoiced product or service, while the customer has through the invoice’s due date, say 30 days, within which to pay the bank. The SCFP and TSFP stages are:
invoice, which specifies the date on which the invoice is to be made, the bank contacts the vendor to offer an early payment in exchange for financing the charge during the terms.
(3) If the vendor agrees and signs a receivable sales contract, the bank purchases the vendor’s receivable from the customer at a discounted rate, secured by the customer’s credit score and low cost-of-capital. The customer shares the cost-of-capital savings with the bank. (4) With the contract signed and the vendor’s receivables purchased, the bank pays the vendor, on behalf of the customer. The vendor is paid on the agreed upon date, unless they opted to pay the fee for early payment. (5) The customer pays the bank by the invoice due date.
In This Issue Customer Payment—Term Pushback Part II .................... 1 International Corner................ 2 Chair’s Message...................... 3 President’s Message................ 3 Key to Success........................ 6 Legal Corner .......................... 8 Education .............................. 10 NOF Scholarships.................... 11 NACM National News............... 12 Credit Learning Center............ 13 Credit Reporting Services........ 15
...continue on page 16
Contacts................................. 20
(1) The customer approves a vendor’s invoice and uploads to a supply chain finance platform, which creates an irrevocable payment obligation. (2) Upon receiving the customer-approved vendor
Page 1 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org