Making Better Credit Decisions With ICE 11 15 17

Over these next 30 to 40 minutes or so, we will be sharing educational insights on how members who use Inet Credit Exchange (or ICE, as it is regularly referred to) make better credit decisions Proudly, ICE has been managing groups for over 20 years

We are honored to be considered a premier leader in the credit group management community I would like to now take this opportunity to introduce Lawrence Andre, our Director of Credit Group Services He's the ICE point professional for connecting new members into our exchange Lawrence, with that, I believe it's time to get to it Thank you, Melanie

Today we're going to talk about how Inet Credit Exchange helps our members, our users, make better credit decisions Now, for the credit professional, your job is to stay ahead of the credit decisions that you make on a daily basis And too often, what we find is that credit professionals are forced to make these decisions when they don't have good data Oftentimes your data is so important in today's business world And if the data is old, if it's stale, if it's irrelevant to your business, it's not going to serve you

After all, your job is to protect your company — to protect your company from poor credit decisions You're here to increase sales, and to grow, and to support the sales staff But you don't want to expose the company to unnecessary risk It's common for credit professionals to turn to the large credit bureaus and pull credit reports from these systems However, what our members have told us over and over again is, they can't get the data they need

They can't make good credit decisions based on those credit reports, and that's why they love ICE That's right, Lawrence That's why credit groups are such a popular resource, you know I know directing credit co-ops myself for many years, members have shared the importance of this data exchange and also the importance of networking with their peers Credit membership provides this ongoing valuable networking opportunity

It's terrific! Yeah, Melanie, you know it was this story — out of this environment of credit groups which are a tool that have been around for over a hundred years — that ICE was born 20 years ago Some of the large national credit groups turned to us and said they were looking for a better solution They were looking for an online solution that brought them the data they valued from the credit group to an easy-access platform, using the internet We built this exchange — it's a closed exchange, for members only — to share data amongst others in the national industry, and to pull reports on a regular basis What we're going to show you today during the webinar is the type of credit reports that our members use on a daily basis

We want you to get a good feel for the value that this does provide for their members, and how they use them on a regular basis to make better credit decisions The three most typical reasons why our members are pulling reports is: One, they're processing new credit applications This is a wonderful situation You have a new customer in the door and you need to determine how much credit to safely extend to them The second reason our members use credit reports is when they are reviewing their existing credit limits in terms

After all, a decision that was made one or two years ago may not still be the right decision today So our members will turn to ICE to review those past decisions and make sure they're still in alignment with the risk on the account And the third reason why our members most frequently pull credit reports on a daily basis is to make decisions on those past due accounts Unfortunately, part of your portfolio will go past due And as you evaluate what to do on those accounts, as they start to age out 15 or 30 or 45 days, our members will pull a credit report to look at the overall picture of that account and to guide them on how aggressively to pursue that past-due account

With that, let's dig into an example credit report out of ICE and look at the value that it provides First, we'll see all the members inside the exchange that are selling them to that business You will be able to get a feel for the different names that the business has in the marketplace, perhaps the different locations that business is operating out of You'll get a much better perspective on the extent of the business This is your starting point when looking at a credit report

Next, the customer will look at — the credit manager will look at — the credit score Here on this sample report we're providing you, you see that there's a credit score of 61 Not only will you see where the count sits today, but you will see that in context of up to five years of history This becomes invaluable, because not only do you know what they're performing today, but you can put that into context on how that account has performed over the last five years As we dig deeper into the report, it's good to know what a score is, but you also are going to want to know the data behind that score

So next, you will turn to what we call the "snapshot" This is where the accounts receivable sits today for all member companies For instance, we can see here that the majority of the receivables is sitting with member 567, and we can see that that member is sitting with over $18,000 in the 91 plus column This would be a concern and a red flag to credit managers We can see that there's other accounts selling

For instance, 152 is selling that same account with a similar balance, but that amount is current due Why is one member representing reporting a current due amount and the other has a 91 plus? Something we'll want to dig into further We can see that there's other accounts — other members — selling on this account with different varying levels of experience As a credit manager, this is going to give me a view of where the account is performing today, at specific dollar levels, and across the different members But I'm gonna want to dig deeper and learn more about this account

I can turn to the recent high section, and what this will show me is the high accounts receivable balance that this account has had with each member over the last 12 months For instance, we can see that member nine had a high balance of over $11,000, but now it's at zero Why is that? That's something a credit manager would want to understand As we dig deeper, we can get to the guts of the credit report, the historical AR, up to three years of history on an account to see where it performs And what we're going to be looking for as a credit manager is we're gonna be looking for the account balances as it steps out into each of these aging buckets

For instance, we can see over a year ago, this account with member number five was current We see some aging step out into the 1 to 30 bucket, and eventually out into the 31 to 60 bucket That account pays down to current again, but then it steps back out to 1 to 30, 31 to 60, even 61 to 90 This type of pattern is a pattern that credit managers are going to look for on the report And most of the time, this specific pattern looks like a slow-pay account

Usually the account pays its bills, but it will take a while to get them to get those dollars in the door This is the experience the account has with member number five Let's look at the experience with the next member Here we're going to look at member number nine Remember, this was the account that had a recent high of over $11,000, but today is sitting at zero

We can now dig deeper into this, and we can see that over a year ago, the account was significantly past due in the 91 plus, and has stayed significantly past due throughout last year and into the beginning of this year And then in the spring, the balance went to zero This is another pattern that our credit managers are going to be looking for on a credit report This could be an account that was written off and that's why it went to zero It could be an account that was eventually collected out of the 91 plus bucket

We don't know specifically by looking at this report, but the beauty of being in a closed "member only" credit group is you can reach out to member number nine and learn more about their experience And members within a closed credit group are usually willing to share and help each other out After all, that's part of the success of being in a credit group So this is what member number nine looks like on the sample report Let's keep going and look at the next member's experience

Here we're looking at member 13, and what we see is that the balance starts out in the 61 to 90; it comes down to 31 to 60, and it will come step back out — we call this stair-stepping Step back out to 61 to 90, eventually 91 plus And it came all the way down to 1 to 30 again, before it ages out to the 91 plus Again, this is a common pattern We talked about this with the first member's experience on this account

We would refer to this as a slow-pay account Usually they pay their bills, but with this member, that cash comes in a little delayed Finally, let's look at the last member reporting on this account, number 155 Here we see smaller dollar volumes, but we see the same stair-stepping, aging out to the 91 plus Eventually it goes to zero

Again, is this a slow-pay account? Or perhaps this is another account that got written off as uncollectible We don't know, but this is a red flag that our members would want to dig deeper into and use to make a determination on whether the risk associated with this account is acceptable for their company or not The reason these reports are so valuable to our members is because: One, their industry-specific What we mean by that is, this is the most relevant data you can get At the end of the day, you really don't care about some random AR experience with a utility bill or something unrelated to the core business

But when you know how that account is paying its main suppliers — your competitors — you have very actual, very good data, a very good finger on the pulse of what that account is likely going to do in paying bills to you Not only is this data industry-specific, but the other secret to the success of ICE is the daily uploads We're loading data every day from members This is fresh data After all, you don't want to know how it was just simply six months ago

You can't afford to have six months of gap in your data Having fresh data that's loaded into the system on a daily basis guarantees you that you're going to know you have a finger on the pulse of where this account sits Our members have lots of reasons why they like ICE One of them is they recognize that, in their job, one good judgment call is more than enough to justify in membership You're forced to make decisions on a daily and weekly basis on accounts

And each one of those decisions that are made stronger and better lead to a stronger company, and lead you to better do your job, to support the growth of that company Also, our members tell us that that confidence means they can go faster, they can get more done, and they can support the sales team Which, let's let's face it, there is so much demands Business moves so quickly, when an order comes in to your company, the last thing the company wants to do is wait for credit to spend a day or a week — two weeks — to make the decision, when our members can log into ICE the same day the order comes in, look at the report and make a confident decision that really helps the team close that sale and move it forward Finally, our members recognize the value the current reports bring in reducing expenses for the department

Remember, a lot of those — if you have experience with some of the large credit bureaus — those are very expensive reports And they don't, quite frankly, have the data that you need This system runs — gives — you a tremendous amount of value compared to those And it allows you to do more with less, and do it more competently, and do it faster At the end of day, what we have come to learn, after working 20 years with our members is, as a credit professional, your job isn't simply about reducing risk, but it's about growing sales

Absolutely, Lawrence, and that's why it's so important to have a good relationship between the sales and the collection departments I will tell everyone on this webinar today that, as an executive in the credit and collection industry for just under 20 years, I have come to appreciate that without sales we have no business And without effective collections, we have no business Making smart decisions aids in the growth and revenue of your company You know that

However, just as important — and I know sometimes it may be difficult, but it's so important — to develop and maintain positive working relationships between your sales and collection teams Thanks, Melanie So there you have it! The reasons why members turn to ICE to participate in a credit group The value they get from a credit report Melanie, I think we have left some time for questions, and Ariel, I think you're going to

you're going to moderate those for us as our Marketing Specialist Ariel, are you prepared to take the questions for us from our participants? Yes, I'm ready Okay, as a participant, if you have a question, feel free to use the chat window of GoTo Meeting Just open up the chat window, submit your question, it will go straight to Ariel

And Ariel will feed that question into our stream of questions, as we do the second half of this webinar So, Ariel, as the first question comes up, let me know, and we'll knock them out one at a time The first one is asking, "How secure is my data?" Very important topic You know, we sit — ICE sits — in a PCI compliant database This is something that's very important to our members and vital to our success

All data sits in very protected servers and data infrastructure We use the latest security protocols to ensure that our platform is protected and safe Your data is vitally important, and we protect it as such The another question is, "How many other credit groups have you started and managed?" Yes, we manage multiple credit groups, a dozen or more credit groups and national industries That's our sweet spot on ICE bringing together companies doing business nationally, putting them together, providing the online platform to pull credit reports, and then giving them opportunities to network and discuss accounts throughout the year at various meetings With that, the next question is asking, "If I leave a credit group, what will happen to my data? Absolutely You know, we're fortunate to have very few companies ever leave, quite frankly, in the 20 years

Generally, whenever we do lose a company it's because they were bought by somebody else already in the group But in the rare occasion when a company has left, for whatever reason, their data is their data, not our data We don't own your data You are lending us the right to share your data within the closed member exchange That's part of the contract

By providing your data, you get access to everyone else's data If at whatever time the exchange is not serving you, and you want to withdraw, we understand that, and will remove your data immediately from the exchange After all, it is your dataTerry, yes, we can send you a recorded copy after this as you asked And another question someone else asked was, "What size companies benefit from ICE?" This is a good question

We get this a lot as members are evaluating their whether ICE is right for them And you know, it's funny, Ariel, when we have a smaller company approach us and we're talking to them, they'll say, "You know, maybe we're too small

Maybe, you know, we only have a few hundred accounts ICE feels like it's not right for us It's for the big companies" What we'll point out to them is that, you're small at your portfolio of a couple hundred counts makes ICE extremely valuable, because it's going to give you accuracy on those accounts to make sure you're not carrying unnecessary risk After all, unnecessary risk on just a handful of those accounts could really do a dent to your bottom line

In smaller companies, get that value proposition But on the flip side, Ariel, when we talk to larger companies, larger companies say, "Well, maybe this is really just for smaller companies After all, you know, my portfolio" — we have companies on the system that have over 200,000 accounts — and they say, "You know, my portfolio is 200,000 accounts I can't possibly pull credit reports on 200,000 accounts, so maybe ICE isn't meant for me Maybe it's meant for those smaller companies

" And as they get to know ICE and use ICE, what they come to realize is, if you're a larger company with 200,000 accounts, the value of ICE doesn't come from pulling reports on all 200,000 accounts Heck, you don't need to pull reports on 200,000 accounts The value of ICE is being able to strategically look at the section of your portfolio that needs the time and attention of the credit manager In having the opportunity to turn to ICE for that section of the portfolio which may only be, you know, a few thousand accounts There is tremendous value for you as a bigger company

We have found over the years that ICE serves well your company size, anywhere from a few hundred accounts to hundreds of thousands of accounts "How is the data uploaded to ICE?" Yeah We take data nightly, as I said There is if you're familiar you know, we have a technology platform called FTP, File Transfer Protocol

If you're not a techie, don't worry about it But bottom line is, on the internet we have a place where you can drop your file Oftentimes our members will have their IT team automate that, so that the file just gets dropped onto our server That's a secured Dropbox It's transferred securely to our server, and then our system loads it every night as we process those files for members

We make it as easy as possible to get your data into the system we recognize your job is to make credit decisions not to be a system engineer how often do you have to upload your data the frequency of loading data is dependent on the group it's important to recognize that the what ice is is really a compact it's it's an agreement between the members of the group you know as a service provider what ice does is we provide the technology platform in a secured environment and we facilitate the exchange of the data we don't own the data and we provide an experience that matches the needs of the members in that industry so perhaps your industry this elevator industry is going to have you maybe there's 10 members there selling into this industry those 10 members will decide the protocols that are best suited for them that each of them will decide to adhere to so it's common that a group will say you know what we want everyone to load their data in once a week we find that to be good most of the time your accounts aren't going to change that much over a 7 day period and that gives everyone the right level of responsibility and yet value at the same time at the end the day the members of the group decide the frequency that they want data in but weekly is usually a good rule of thumb some do daily some do less often as a follow-up what happens to a member who does not regularly upload their data yeah you know our job as I said is to facilitate the group on behalf of the group after all your job is to make credit decisions not to go not to go with facilitate and administer the exchange of this data that's what you rely on us to do we'll work within the parameters of the group's wishes to follow up with individual members to make sure that everyone stays on track that the data gets into the system on a schedule that the group expects and we also make sure we monitor the usage so that ice is being used appropriately by the members that's all part of what comes with your subscription to the ice platform can you speak to the networking opportunity that Melanie mentioned yeah you know Melanie hit a really good point in fact Melanie I know how passionate you are about this topic would you like to share more about some of the success stories you've seen come out of the networking opportunities sure absolutely you know it's it's so vital and valuable when the members in the similar industry get together they have an opportunity I Annette the exchange and the data is very important and relevant to making better credit decisions but when you can get from time to time into a room or perhaps spend a couple of days at a conference or regional meeting with your peers the information exchange that comes out of that and the new friendships that are created that allow for such a friendly natural exchange of information for everyone's success is just it's very it's beautiful to watch and it's it's quite frankly such a benefit to being a part of a credit group it I couldn't I couldn't press anymore the value that comes with meeting and getting together and and at times sharing a meal together and just having that Network opportunity in addition to the data exchange but I will say you know just as Lawrence mentioned some some members you know do not have that opportunity to do it because of perhaps budget constraints or or just the opportunity of time however so many of our groups do take advantage of of networking opportunities through conferences regional meetings etc etc and it also opens up the opportunity to reach out to them reach out to each other outside of that when they have a particular question or a concern so it's an opportunity to continue to bounce ideas off of each other in the same industry and allowing for just better success for everyone Melanie is something we often talk about and that we find it's isn't it interesting how on one hand you'll have members of the group who can't wait to get to the next networking opportunity the next meeting because they that that's what they that's really what they thrive off of in the exchange and yet we have other members who you know that the secondary to them and they may not initially see the value in it but once they get in that environment and form those relationships they really understand the value of it don't they oh absolutely I had the pleasure of being in Kansas City just last month at one of our credit group meetings and it was it was standing room only throughout the entire a few days together and just the camaraderie that took place and the information exchange it was it was just a wonderful opportunity we all we also do surveys you know at the end of each of the credit group meetings and in ensign conferences we always pull you know the attendance the attendees and and we you know we we seek to learn and grow continually on what serves them and I'm very honored to say that you know I receive time and time again accolades for the credit group exchange that takes place and as well we our members are very vocal about opportunities for for new ideas etc etc so with every regional meeting and every conference comes new education new opportunities to learn and grow so it's not the same thing a year after year or time after time so it's a continued opportunity to allow yourself as a professional to blossom Melanie I I find it interesting how you know we'll look at the say the exchange you were just at how there were you know I think there were over 50 members at that meeting you know some of them will walk out of there thinking oh my gosh it was so good to really connect with my peers and understand you know meet who they are and form those relationships and yet there's others that walk out of there and say my gosh I got some really important data and action items on some of the accounts that I need a guidance on to determine what to do well yeah yeah absolutely and then Melanie you will get and we'll get a substance other subset of people that will will say you know oh my gosh I learned some best practices and some stuff that I didn't know I could do in my job they're stronger as a credit professional than when I walked in I mean each person walks with a slightly different value but it's always fun to watch how they walk away refreshed and energized from these meetings yeah absolutely yeah so good good stuff and all part of the part of the value add for being a member of of an exchange in a credit group area what else do we have and questions from the from the webinar today I've had one more that says what support is available of course we see again that's part of what we do here at ice that's part of what comes with your subscription is we know that you're going to have new member new users come into your company or there may be a feature that you don't use on a daily basis the I support team is here too to help you as you have questions sometimes those questions will be related to the data that's on a credit report maybe you're seeing something in the system that doesn't quite make sense to you you can always reach out to I support will help guide you understanding the data that you're seeing through the system the tools that are available to you know we're here to train your team and to set you up for success that all comes with your subscription and it's available during traditional business hours five days a week I think that's all the questions we have right now Mary so Melanie I think I think we we've hit it you know that that is the value of ice we've shown it we've shown the current report with that asked to answer the questions Melanie what do you have for us in closing no I I just think it's terrific it was a great thirty minutes I'm hopeful that everyone gained a nugget or two of knowledge and in in in the effectiveness and the importance of buck and the benefit of joining a credit group I I'm hopeful and with confidence that the time everyone set aside today provided the knowledge to think into this opportunity further so with that I thank you for taking the time to join us today have a good rest of the day everyone thank you

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