Coface Receivables Management: Reliable Tools for Effective Credit Management

1. COFACE Receivables Mangement Thomas Boelinger Director Russia & CIS 10 October 2007

2. 1. Receivables Management Cycle Supplier Customer Creditor Debtor Due Date Hope Dispair

3. 1.1 Receivables Management Cycle Sectors Studies + country risk Kompass / Marketing data Data base Information / information reports Credit Ratings / Scoring Data links Due Date MARKET STUDIES INVOICE MANAGEMENT SALES CREDIT ANALYSIS MARKETING CAMPAIGN

4. 1.2 Receivables Management Cycle Coverage Recoveries Finance $$$ Due Date Payment Credit Insurance Factoring Debt Collection

5. The Coface Offer: A full range of services providing proven, easy-to-use tools for receivables management

6. Companies need reliable information concerning trading partners’ financial situation and their ability to honour commitments (solvency information). They also need to identify potential business opportunities with creditworthy parties (marketing information). That is why Coface bought some years ago KOMPASS and is able to provide marketing data in 66 countries all around the world (direct subsidiaries + Kompass franchisees). 1. Information and receivables management

7. Coface network of credit information subsidiaries in Western Europe (Coface services and Coface serviços Portugal are market leaders in France and Portugal respectively while Coface services Belgium is N°2) North and South America are covered with 11 services entities based in all majors countries of this continent Central Europe and Baltic states with Coface Central Europe and Coface IGK entities based also in 11 eastern countries + Russia, Ukraine Africa, Middle east and Mediterranean region with 10 services entities Asia with 4 entities. Most of these services entities offer also debt collection Coface network is completed with Credit alliance network giving access to information in most of the developed countries of the world Through this dense web of international information sources, data are fed into the Common Risk System. The system is used by Coface’s 260 underwriters, and also by Coface clients, to obtain up-to-date information about 50 million companies worldwide in real time. It includes default data for some €340 billion worth of commercial transactions. 1.1Creditworthiness information

8. Companies need to be aware of who they are intending or doing business with. Coface Credit Management Services Ltd in Moscow and St. Petersburg provides different types of business information reports about companies in all business sectors Including information about registration, founders, official financial figures, court proceedings etc. 1.2 Business Information reports

9. Coface Credit Ratings are designed to provide an in depth solvency assessment. National Rating Agency Coface-ARB Ltd, Moscow, evaluates companies based on information obtained during visits of the companies Assessments based on Coface international methodology describing crucial ratios including probability of default Assessment of companies in relation to their business sector and region in Russia, analysing management figures and group companies. CCR can be used by companies as valuable marketing tool for domestic and export business CCR is frequently used by Coface credit underwriters 1.3 Coface Credit Rating to track company solvability

10. For receivables covered by a guarantee under a credit insurance contract, a company benefits from Coface world wide collection services for recovery of amounts due from its clients. If a company has not taken out a credit insurance policy, it can avail of the services of Coface Credit Management Services Ltd, which can make a comprehensive or flexible proposal for collections in Russia and abroad. For exceptionally large claims, Coface has created Coface RBI (Recovery Business Intelligence). That subsidiary provides high value-added international debt collection services that permit detecting possible defaults by debtors through in-depth investigations. 2. Receivables management and collection

11. 3. Credit insurance • Companies, in the course of their trade relations, often have to grant their client companies time to make payments. To cover risks associated with such business-to-business credit companies can resort to credit insurance. • Whatever its form – domestic, export, global, specific or excess loss, commercial and/or political – credit insurance protects companies and banks against the risk of default by clients. • Coface cooperates in Russia with JSC Kapital Insurance for the offer of different credit insurance schemes

12. 3.1 Global credit insurance In most cases, Kapital/Coface provides coverage for a company’s (or group’s) entire client base, whether it comprises a dozen or several thousand clients. • The business offer in this area is centred on the Globalliance policy, intended for companies wishing to completely or partially outsource their accounts receivable management and associated risks. Globalliance is a flexible credit insurance policy that can be tailored to any company’s needs, whatever its size or organisation, its business sector, the countries where it operates, or its payment-default coverage needs linked to client or country risks. • Clients can make use of an easy on-line administration tool called Cofanet.

13. 3.2Specific (single risk) credit insurance A company may sometimes need specific credit insurance (or Single Risk) to cover financial risks, notably linked to the political context in emerging countries. • Kapital covers such risks via special contracts established in partnership with the Coface subsidiary Unistrat Coface.

14. Depending on their own experience and organisational structure, companies may prefer to use credit insurance for exceptional credit risks or major losses above the excess and within the cover limit fixed by a common agreement. Kapital offers an Excess Riskpolicy for companies seeking to protect their balance sheets against major losses resulting from unforeseen payment defaults by key customers. Responsibility for the customer credit management policy remains with the client-company’s credit manager, who is evaluated beforehand by Kapital. Excess loss credit insurance

15. The services and guarantees provided by Coface indirectly play a key role in companies’ receivables financing decisions. By delegating them to a bank (or other securitisation vehicles), companies can obtain the credit they need for the development of their commercial relations more easily. Coface provides direct receivables financing through its factoring operations (receivables purchasing) in an ever-increasing number of countries. It also provides services and cover to more than 80 factors worldwide. This service will also soon be available in Russia. 4. Factoring

16. Thank you for your attention