Credit Control Policies and Procedures

Contents

1. Introduction

2. Opening a New account

3. Non-Standard Terms

4. Monitoring & Reporting

5. Collection Protocols

6. Collection Processes

Appendix 1 - Trading Account Application

Appendix 2 – Non-Standard Terms Approval Form

1. Introduction

Delta Agribusiness adopts a pro-active approach to all aspects of its customer relationship management.

The principal contact with the customer in respect to credit control (eg opening a new account, credit limits or overdue accounts) is the Delta relationship holder ie the Branch Manager or nominated Branch Staff member.

Our policies and procedures in relation to all aspects of the credit control function are set out in the following pages.

Whilst maintenance of strong customer relationships is a core ingredient to the continued success and growth of our company, both staff and customers need to be aware of the commercial imperatives and professional standards required to be adopted in respect to credit control.

Credit Control starts with the credit application (“Trading Account Application”), and runs concurrently through all aspects of our agronomy, sales & marketing functions, customer service and logistical support services, and through to the payment by the customer for the goods and services received. All staff involved in any of these functions needs a full appreciation of the Company’s policies and procedures in respect to Credit Control. 

2. Opening a New Account

Customers seeking a credit account with Delta Agribusiness are required to complete a Trading Account Application – see Appendix 1.

Goods and Services are not to be provided on credit to new customers until the Trading Account Application form is completed, reviewed and processed by the Credit Supervisor, and the Branch Manager receives notification that the new account is available for use.

Branch Manager’s should review the Trading Account Application for completeness prior to forwarding to the Credit Supervisor for processing. The Credit Supervisor will immediately return to the Branch any Trading Account Application that is not fully completed. 

If the new account is requesting a credit limit above $75,000, the customer will be asked to sign a guarantee and indemnity. If the credit limit request is above $75,000 they may also be requested to provide the priory 2 years financial statements to enable an appropriate assessment of their financial viability, dependent the level of known history within the community and industry.

Trade References are checked by the Credit Supervisor, and information gathered from these phone conversations forms an important component of the decision as to whether we should open a credit account. Please inform potential new clients that Elders & Nutrien are not suitable referees, as we understand these organisations have a policy of not providing credit references.

Upon receipt of a fully completed Trading Account Application, the Credit Supervisor will undertake the necessary credit reporting agency and trade reference enquiries. The determination arising from these enquiries will be communicated to the Branch Manager within 3 working days of the receipt of the Trading Account Application.

Should you require a customer account to be set up urgently, please ensure you advise the Credit Supervisor when submitting the application and follow up with a phone call.

3. Non-Standard Terms

The companies standard trading terms are 30 days EOM. All non-standard terms and any variations to the standard terms must be approved by the relevant authority prior to a staff member offering any payment variation to a client. For clarity, these must be approved by either of the Managing Director or the Chief Financial Officer in relation to all long-term seasonal finance terms (EG: Harvest payment on winter crop purchases). The Co-heads of Procurement may approve short term variations (EG: an extra 30 or 60 days) up to a maximum of 90 days EOM. Any non-standard term request must be requested using the “Non-Standard Terms Approval Form” found at Appendix 2.

Wherever possible, branches should look to promote our off balance sheet seasonal finance facilities to clients (DLL), as well as utilising supplier dealer terms agreements in place when the variation proposed relates to Fertilizer. 

4. Monitoring and Reporting

A number of reports have been developed to assist Branch Managers and Branch Staff to be proactive in their management of credit control.

Credit Control management revolves around the following two key criteria:

a) Credit Limits

b) Outstanding & Overdue Balances

Branch teams should review individual credit limits in line with individual customer developments (eg acquisition of additional land) to ensure credit limits remain adequate. Exceeding their credit limit may mean the account is placed “on hold”. The credit team will notify the Branch Manager that an account is to be placed on hold, however clients will not be contacted by the Credit team in this circumstance; The client will be unable to purchase additional product or service until the account is brought below the approved credit limit. Should the customer require an increase in their credit limit they must be requested in writing and be subject to the standard credit review process. Common sense will prevail when this relates to a longstanding customer with strong credit history, and the company CEO or CFO can fast track a credit uplift when appropriate.

The following reporting automations are in place to help Branch Managers and Branch Staff have access to relevant information as required to manage customer accounts:

• NEO (Live) – Debtors tab lists all customers for the branch, sorted by “Overdue” values and with appropriate flags where customers are exceeding their credit limit. This report also has the ability to record and save notes which reflect the customer’s account and/or conversations which have been recently had with the customer.

Customer On Stop (Email) – sent weekly on Monday morning to all branch staff identifying customers where legal action has commenced, customers who are on stop, and customers who are over their credit limit.

Branch staff should be monitoring the NEO Debtors report on a daily basis and the weekly Customers on Stop email should be discussed in branch meetings every Monday morning with a clear understanding of which customers importantly are on Stop.

Branch Managers should be in constant communication with the Credit Supervisor for accounts which are flagged for any reason (whether they be overdue, over credit limit or a customer flagging a potential payment issue) and be proactively working with the customers to ensure any overdue debtor positions are discussed and collected in a timely manner. Branch Managers should ensure the discussions with customers are reflected in the “notes” section on the customer account in ABM immediately, even if you have tried to call and left a voicemail.

5. Collection Protocols

The principal contact for the customer in respect to credit control (eg opening a new account, credit limits or overdue accounts) is the Delta relationship holder ie the Branch Manager or nominated Branch Staff member.

Each branch manager/relationship manager will have their preferred method of communication with Delta on credit control matters. Methods available include:

• Discussing face to face whilst purchasing at the branch, or during farm plan or agronomy visits – the NEO Report (reviewed daily) and Weekly emails referred to above will help ensure these conversations are had.
• Calling or sending text message to the mobile phone
• Sending an email

Initial conversations regarding overdue accounts are an extension of the sales function, and consequently the responsibility of Branch Operations. The Credit Supervisor is willing to assist Branch Manager’s and Branch Staff in the initial conversations with individual customers if required.

The Credit Supervisor’s participation in the collection of overdue accounts will generally increase as the overdue debt progressively ages, however it always remains the responsibility of the Branch & Network Managers to manage overdue accounts.

6. Credit Control

The flow diagram below summarises the credit control collection processes employed by Delta Agribusiness.

The Branch Manager has primary responsibility for making initial contact with the customer to discuss overdue balances and summarise such conversations in ABM “notes” Branch Manager’s may request the Credit Supervisor to initiate the initial contact where they believe this will produce a more effective outcome.

As the age of the debt increases for a particular customer, so should the regularity of communication and importance of receiving commitments to pay from the customer. 

• When a customer first enters the P1 (0-30 days overdue) section of the NEO Debtor Report, there should be a gentle reminder that their account is overdue and a request that arrears be cleared up before the end of the month. Details of the conversation must be recorded in ABM “notes”. 
• If the customer enters the P2 (31-60 days overdue) section of the NEO Debtor Report, the discussion should be more direct and clearly articulate the ramifications if payment is not received by the end of the month, e.g. account will go on stop supply and further action may be taken (including legal action if required). This is also a good opportunity to receive a definitive payment commitment from the customer. Again, details of the conversation must be recorded in ABM “notes”. 
• If the customer enters P3 and beyond (60+ days overdue) the customer account will automatically be placed “On Stop” unless an agreed and approved payment plan is in place. The Credit Supervisor will take an active role in the discussions with the customer and the collection of the overdue debt. Customers placed “On Stop” will not be allowed to purchase until all arrears have been cleared. Once cleared, a review of the customer’s credit limit may be undertaken and may reduce or be terminated due to their poor payment history.

The Credit Supervisor undertakes the following series of actions when a customer account is placed “on STOP”, until the full amount of arrears has been recovered or an agreed plan for recovery is in place:

Appendix 1 – Trading Account Application

Can be found: https://www.deltaag.com.au/about-us/admin/ “Account Application”

Appendix 2 – Non-Standard Terms Approval Form

Subject: Non-standard credit term approval request for <nsert Customer Name>

Dear Matt / Gerard,

cc: Sharon Collingridge

Non-standard credit terms have been requested by the below named client. The relevant details are set out below:

Comments:

• <insert comments about customers trading history, why this particular customer account warrants extended trading terms>

ACKNOWLEDGEMENT AND ACCEPTANCE

I ………………………………… confirm that I have read and understand the Code of Conduct for Trading Activity and Supply of Non-standard Credit Terms (Code of Conduct). I also confirm that I have provided a copy of the Code of Conduct to all workplace participants under my supervision and that they have advised me that they have read and understand the Code of Conduct. 

Signed:   

Date: