A buzz topic that came up repeatedly during Tuesday’s education sessions of the 118th NACM Credit Congress in Orlando was financial statements. But, expert speakers agreed with little deviation that it usually worth the effort to try to get them and, importantly, to actually read/review/understand them.
“If you can get financials, always do,” said Ed Bell, PhD, ICCE, of Grainger Inc. “Even if you have to sign a non-disclosure agreement, among other things, do it. There really is no substitute.” He reminded attendees, however, financials may not be the whole story…and there are plenty of ways to improve your credit-granting decisions without them. Bell said so much information could be gleamed from outside credit agency information, following current events and more frequent contact. In a simultaneous education session, Deborah Thorne, Esq., of Barnes & Thornburg LLP, extolled the virtues of visiting a customer, primarily if your company is dependent on a part/component they supply to you.
“If there are four people working and they usually have or look like there should be 50, you know there is a problem.” She added that getting access agreements in place at the beginning of a relationship, “when everyone is still friendly,” is a good idea.
For those who are successful in garnering financial statements an important lesson, that one would think to be obvious, is actually reading and analyzing them, said NACM Chairman Toni Drake and Lynette Warman, Esq. But that so often does not happen, and the statements end up in a drawer.
“It does not do you any good if you don’t actually read them first,” said Warman. “If you didn’t check them out, they weren’t germane to your credit decision, and you won’t be able to convince a judge it was...I know you’re busy, but do things like check that the person actually owns their property they listed. There are a lot of people who just list property thinking you’ll never check it out."
Brian Shappell, CBA, CICP, NACM staff writer
Check back here and at our Twitter handle (@NACM_National) throughout the week for more on-site coverage of the 118th Credit Congress, which is officially underway from Orlando.