Global Credit Management -- Contents -- Preface -- PART I CREDIT POWER AND BUSINESS DEVELOPMENT: THE STRATEGIC OVERVIEW -- 1 Why Grant Credit? -- 1.1 Introduction -- 1.2 Product offer enhancement credit strategy -- 1.3 Comparative cost of money credit strategy -- 1.4 Credit strategy for administrative efficiency -- 1.5 Credit strategy to build trust -- 1.6 Credit strategy for business development -- 1.7 Conclusion -- 2 Customer Risk -- 2.1 It's people! People make the difference! -- 2.2 Due diligence -- 2.2.1 Credit fraud -- 2.3 Customer payment risk -- 2.4 Customer risk analysis tools -- 2.5 Analysis of financial information -- 2.5.1 However reported, operating cash flow can be misleading ... -- 2.6 Analysis of information about the future -- 2.7 Credit scoring -- 2.8 Trade Credit Risk ScoreCard -- 2.9 Customer limits -- 2.10 Authority to approve credit limits -- 2.11 Powerful collections -- 2.11.1 Specialized trade debt collectors and debt traders -- 3 Country Risk -- 3.1 The mismanagement of Oolretaw -- 3.2 Introduction -- 3.2.1 Transfer or sovereign risk and local factors risk -- 3.3 Country risk management -- 3.4 Country risk rating agencies -- 3.5 Unique-company-product-or-service country factors -- 3.6 A practical country risk management process -- 4 Bank Risk -- 4.1 Introduction -- 4.2 Well, we have the bank's commitment but are we safe? -- 4.3 Understanding bank risk -- 4.3.1 International bank supervision -- 4.3.2 Basel II -- 4.4 Bank risk analysis and bank exposure limit decisions -- 4.5 Two practical bank risk management processes -- 5 Risk Mitigation Power -- 5.1 Introduction -- 5.2 Cash in advance -- 5.3 Credit insurance -- 5.3.1 Export credit agency cover -- 5.3.2 Pre-shipment or pre-delivery risk cover -- 5.3.3 Country risk -- 5.3.4 Catastrophe cover -- 5.3.5 Difficult markers -- 5.3.6 Post-loss insurance.

5.4 Letters of credit UCP 500 and eUCP -- 5.4.1 Warning! Warning! -- 5.4.2 LC myths and legends -- 5.4.3 LC reality -- 5.4.4 LCs may be past their "use-by-date" but ... -- 5.4.5 Alternatives for high-volume, low-value transactions -- 5.4.6 Alternatives for low-volume, high-value transactions -- 5.4.7 Supplement to UCP 500 for electronic presentation (eUCP) - version 1.0 -- 5.4.8 Warning! Buyers beware -- 5.5 Standby letters of credit subject to ISP98 -- 5.6 Bank guarantees and Uniform Rules for Demand Guarantees (URDG) -- 5.6.1 URDG -- 5.7 Parent company guarantees -- 5.7.1 Transactional parent or sibling company guarantees -- 5.7.2 Letters of comfort -- 5.8 Payment undertakings and risk-sharing agreements -- 5.8.1 Historical development of payment undertakings -- 5.8.2 Payment undertakings and risk sharing in practice -- 5.9 Documentary collections -- 5.9.1 Documents against payment (DP) -- 5.9.2 Documents against acceptance (DA) -- 5.9.3 Documents against bank guaranteed acceptance (DA*) -- 5.10 Credit derivatives -- 5.10.1 Credit default swaps (CDSs) -- 5.11 Netting agreements -- 5.12 Collateral security -- 5.12.1 Security interest -- 5.12.2 Outright transfer -- 5.13 Bills of exchange and promissory notes -- 5.14 Discounting receivables and forfaiting -- 5.15 Securitization -- 5.16 Other ideas and conclusion -- 5.16.1 Bonded (customs supervised) storage -- 5.16.2 Retention of ownership -- 5.16.3 Selling direct to better buyers -- 5.16.4 Countertrade -- PART II GLOBAL CREDIT POWER IN THE TWENTY-FIRST CENTURY: THE NEW SOURCES OF POWER -- 6 Receivable Asset Management - Portfolio Power -- 6.1 Background -- 6.1.1 Cost of capital -- 6.2 What does all of this mean to me, Boss? -- 6.3 Managing the portfolio dynamic of transactions -- 6.3.1 A scenario for illustration purposes -- 6.4 Managing correlation risk -- 6.5 Managing concentration risk.

6.5.1 Payment risk swaps -- 6.5.2 Bilateral swap contracts -- 7 Electronic Commerce - Internet Power -- 7.1 Introduction -- 7.2 Automation of the order-to-cash process -- 7.2.1 An example sales transaction with LC and STP -- 7.3 New credit risk mitigation techniques -- 7.3.1 TradeCard prerequisites -- 7.3.2 The TradeCard process -- 7.4 Credit analysis and decision -- 7.4.1 Authentication -- 7.4.2 Pre-qualification -- 7.4.3 Instant decisions -- 7.5 Finding credit risk cover efficiently -- 7.5.1 Trade financing and/or payment risk auction sites -- 8 Outsourcing - Alliance Power -- 8.1 Introduction -- 8.2 Implications for trade credit management -- 8.3 Outsourcing order-to-cash -- 8.4 Adding value -- PART III POWER BLUEPRINTS - PRACTICAL TOOLS: THE HOW -- 9 Measuring - Switch on Credit Power -- 9.1 The reward system is the lever -- 9.2 Connecting the lever to credit power -- 9.2.1 Match competitors/provide competitive edge/expand the market -- 9.2.2 Cost of capital -- 9.2.3 Receivables/cash flow/bad debts -- 9.2.4 Sales-weighted DSO - the alternative that works -- 10 A Practical Country Risk Management Process -- 10.1 Preamble -- 10.2 The 11-step process -- 10.3 The country risk limit decision process explained -- 10.3.1 Shareholders' equity -- 10.3.2 Risk categories and equity allocation -- 10.3.3 Country risk rating agency -- 10.3.4 Link risk ratings with risk categories -- 10.3.5 Choose a list of countries -- 10.3.6 Calculate the initial country limit -- 10.3.7 Evaluate company-specific elements -- 10.3.8 Adjust the initial limit -- 10.3.9 Overall review -- 10.3.10 Monitor and manage exposure -- 10.3.11 Review and update limits -- 11 Two Practical Bank Risk Management Processes -- 11.1 Preamble -- 11.2 The five-step process -- 11.3 The five-step bank limit decision process explained -- 11.3.1 Determine the acceptability of the bank.

11.3.2 Bank's own funds -- 11.3.3 Decide a factor -- 11.3.4 Monitor and manage exposure -- 11.3.5 Review and update limits -- 11.4 A Bank Credit ScoreCard - balanced analysis -- 11.5 A bank exposure limit model and internal rating scheme -- 11.5.1 Rules of the bank limit model -- 11.5.2 Internal bank credit rating conversion chart -- 12 Promissory Notes and Demand Guarantees -- 12.1 Introduction -- 12.2 Promissory notes (PN) -- 12.3 Demand guarantees (DG) -- 12.4 Alternative one -- 12.5 Alternative two -- 12.6 Risk considerations -- 12.6.1 Buyer's point of view -- Appendix 12.1 Promissory note format -- Appendix 12.2 Demand guarantee format -- Appendix 12.3 Demand guarantee format (no promissory note) -- 13 Payment Undertakings and Risk Sharing in Practice -- 13.1 Introduction -- 13.2 Historical development of payment undertakings -- 13.3 Utilizing payment undertakings as a foundation for an alternative form of payment security -- 13.3.1 Buyer's bank guarantee -- 13.3.2 Documentary credits (LCs) -- 13.3.3 Promissory notes -- 13.3.4 On the other hand -- 13.4 The payment undertaking alternative process -- 13.5 Negative points -- 13.6 Positive points -- 13.7 Summary -- Appendix 13.1 Payment undertaking format -- Appendix 13.2 Risk participation agreement example text -- 14 Trade Credit Risk ScoreCard and Limit Model -- 14.1 Introduction -- 14.2 A Trade Credit Risk ScoreCard -- 14.3 A trade credit limit model and internal rating scheme -- 14.3.1 Rules of the trade credit limit model -- 14.3.2 Credit limit model considerations -- 14.3.3 Commercial usage -- 14.3.4 Relating the maximum credit level to cost of sales -- 14.3.5 Internal trade credit rating conversion chart and maximum limit indicator -- Appendices Credit ScoreCard Analysis Examples -- I Bank A - Subsidiary of an international bank -- II Bank B - Local bank in an emerging market country.

III Company A -- IV Company B -- V Company C -- VI Company D -- Bibliography -- Index.