Credit and Collections Panel Discussion Moderated by Nancy Ebben

Introduction Introduction Credit/Collection reporting structure Bill Scannell - Lucas Milhaupt Guy Kwaterski – Vollrath Company Kayla Waldner - Oshkosh Corporation Credit/Collection reporting structure Quick introduction of company, reporting structure of credit/collection department, handling of domestic/international accounts Plug/Convo piece: benefits or value of handling domestic accounts differently Nancy to comment about policy: importance of written policy in place which we will be discussing at the end of the presentation

Agenda and Topics Credit Collection Credit policy and procedures Creating new accounts Determining payment terms Open account discussion Open account risks Risk mitigation Maintaining credit lines Collection When to collect How to collect Payment plans and promise of payments Customer refunds Special circumstances Credit policy and procedures

Credit New sales opportunity Creating new accounts Credit application Compliance review Determining payment terms Cash in advance Prior to shipment Payment upon shipment Open account New sales opportunity Standard payment terms Can you quote without distributor agreement Quote subject to Credit approval Credit Application Prior to shipment but product being built Is there enough margin to build product without payment Upon shipment Not an A/R so not insurable When title transfers affects payment terms?

Credit Open account Letter of credit Determining creditworthiness Checklist of minimum criteria Credit References: Bank and other Company references Credit reports Financial statements Establishing credit amount Sharing credit line information internally and externally Establishing payment term Country standards or requirements Establishing payment tenor Letter of credit Financial Statements Middle east can’t get financials, China not transparent, Africa keep separate books, are they valuable information Distributers different than end users – distributers may be smaller and less creditworthy than the end user What amount to request financial statements Country standards or requirements Certain countries limit money flow and that impacts payment terms Establishing credit amount Whole goods and aftermarket (sharing lines) Payment tenure Company standard net 30, 60, 90 Do you charge cost of funds, increase price to account for tenor Industry Standards: Final Acceptance

Credit Open account risks Commercial risk Country & political risk Currency risk Commercial risk Sell to Distributer using End User risk Political risk Panama elections stopping money flow for dealers who have contracts with Panama government

Credit Risk mitigation Credit insurance Confirmed Letter of Credits Standby letter of credits Payment guarantees Escrow account Political risk Panama elections stopping money flow for dealers who have contracts with Panama government Credit insurance Do you insure everything, somethings, uninsured Factoring A/R with or without insurance

Credit Maintaining credit line Regular cadence for review and renewal Deactivating accounts How often to review (yearly?)

Agenda and Topics Collection When to collect How to collect Payment plans and promise of payments Customer Account Credits Special circumstances How to track past due invoices Managing overall credit line on a monthly basis How manage approved but not yet invoiced

Collection When to collect How to collect Sending statements and invoices Timing How to collect Communication mode Communication barriers Cultural differences Sending statements and invoices Timing - when to collect, when to escalate

Collection Payment plans and promise of payments Application of penalty interest Instructions to pay later invoices first or pay cash in advance for future orders versus paying past due invoices Application of account credits Payment plans and promise of payments Do you release orders based on promise of payments Application of account credits If they ask to wire do you wire or do you apply to past dues Colombia – country requires return of warranty credits

Collection Special circumstances Bankruptcy Purchase of Organization Extended Term Requests

Credit Policy and Procedures Written policy in place Upper management support Approvals for dollar value or terms Export Credit Insurance on all exports or selected exports

Questions or Comments?

Thank you! Xie xie