(00:00) , all right. Awesome. So, thank you everyone who has joined and if you're joining right now, welcome to the webinar. U, my name is RohiP Grover. I am our VP of Partnerships at ezyCollect. I'm joined today with Laura Walker who's our senior AE and sales lead. , we've also had Joseph Drohan from Brookaire and we have Dynalee Garcia from UBT.
(00:24) And today's presentation is on identifying credit risks and how to spot red flags during customer onboarding. So yeah, we're going to start the webinar now. First thing first, I'm going to hand over to Dina to talk a little bit about the partnership between UBT and ezyCollect. Thanks Ro.
(00:45) So before we dive into the platform, I just wanted to give a quick minute to highlight the strong partnership between UBT and ezyCollect. been a partner for over seven years now. During that time, we've seen more than a hundred businesses join the platform. This uh partnership has generated over $500,000.
(01:07) back to UBT and some of the businesses currently are using ezyCollect include Brookaire, Schaburg Specialties, and Protecta. Over to you, Ro. Awesome. Thanks, Di. , and yeah, just to kind of echo what you're saying, yeah, it's been a great partnership. It spans across Australia, New Zealand, the US, Canada.
(01:30) , and yeah, we're just really grateful to, uh, be able to work with such amazing companies that are part of the UBT community. , fantastic. Uh, Laura, can you move to the next slide for me? Brilliant. So guys, I'm going to give you a very quick overview of what we're going to be covering today. So we have three major things that we're going to be talking about.
(01:49) The first thing is we're going to be talking to Joe from Broke Air and kind of understanding a little bit about how he does credit risk monitoring in practice. , so he's going to give us a bit of an experience as well as talk through how he's been using the ezyCollect tool and what he would recommend for businesses to do.
(02:07) Immediately after that, , we're going to be talking about some of the common red flags and best practices. Uh that's where Laura Walker and Joe are both going to have a bit more of a chat and go through some of the the issues that you would see whenever you're doing a customer on boarding, what to look out for, and some of the best things to do in order to make sure that customer on boarding is smooth and efficient.
(02:29) And then finally, we're going to end the webinar by going through some of the tools available for UBT members. So these are things that UBT members can actively use as you know from ezyCollect that are going to help you with customer onboarding and kind of just mitigating credit risk.
(02:46) So without further ado I'm going to hand over to Laura to take you guys through everything. Awesome. Thank you Roth and hello everyone. So I'm here today with Joe Drohan. He's got some amazing wisdom to share with us. I first met him I think a year ago and uh he's using some of the ezyCollect tools for credit on boarding. I guess to start off Joe, maybe you can tell us a little bit about your story at Brookaire, what you do and how you came to work there? Sure. So Brookaire is a filter manufacturer and distributor.
(03:25) , it sells to about 1,500 active customers and about another thousand prospects on top of that and we sell mostly in the North Atlantic states, 16 states and a little bit of Canada. I've been here for about three and a half years. I got here and I came here because I thought it was a good growth story.
(03:49) They've almost tripled the size of the company in the time that I've been here. , it's got a lot of good things, good attributes. It's got an excellent customer base. And frankly, customers that pay, not a lot of customers who leave. , it's got a very strong customer service component. A big aspect of the customer service component is the next day delivery options so folks can have their filters at their job sites for the next day.
(04:16) But it was a growth story and I wanted the opportunity to be a part of it as it continued to grow and to you know frankly find solutions like we did with uh with ezyCollect to help us create a structure that allowed the company to continue to grow beyond uh you know the 1200 current customers and uh you know to something even even bigger. So it's been a a good three and a half years and the growth has materialized and uh ezyCollector's been a part of that uh that growth story. Thanks for that. Yeah.
(04:49) So I guess maybe to take a quick step back so that we understand the context around the credit onboarding experience that you have. Tell me a bit about your typical customers. How do they find Brook and what's a bit about the sales process? When do credit checks become or credit insurance become a part of the conversation? So, we have nine full-time engaged uh sales staff.
(05:16) a couple of the equity owners, actively looking at new customers and new territories, new regions. and we also have a website that people can come in through, but typically they will find different verticals of customers. So we have uh data centers or hospitals. We have some pharmaceutical companies, government buildings, some real estate uh managers and some smaller uh HVAC companies or builders.
(05:46) Uh all of which have different needs uh for filters. But typically the sales staff will bring in a new customer. Uh that customer will give some indication as to what they want their first order size to be. they will get once we know who they are, they'll get a credit application from us.
(06:06) that credit application used to come back on paper. Over the last 3 months it's been digitized. There's now a workflow tool that they can use to complete the credit app. Uh but typically that credit app will give us some background information on how we want to start with them, what their terms might be, and how much credit we can give them.
(06:31) , and really a lot of reference uh information, trade references, bank references, several names that we need to get to, you know, if uh we need to contact the company. Uh, but the credit app is really the substitute for what I would say is our contract that they sign, indicating that they accept our terms and we will extend, you know, some amount of credit to them to start buying filters from us.
(06:51) But typically, they're going to come to us through those nine salespeople or a member of the ownership. Yeah. And I remember you saying that before you started working with ezyCollect that you had credit insurance as your main sort of way of mitigating credit risk. Can you tell us a bit about that and what the pros and cons of that were? Yeah, so we had a large global bank who had an accounts receivable insurance platform underwriting our insurance risk. It was not an inexpensive venture.
(07:17) and it was really a two-fold engagement uh with this global bank. Number one is they underwrote AR risks. So if we had a default or a bankruptcy that was covered under their insurance policy uh after we met a certain deductible uh they would reimburse us for that loss.
(07:37) Uh and the second part of it was so that they could understand their own uh underwriting risk. They would un uh uh create a dollar value or an underwriting amount that they thought that they could insure the customer for. We defaulted to their underwriting value as the starting point for us to assign credit to all new customers. , as an example, the typical fallback uh credit terms were for uh $5,000 in initial credit and uh 30 days.
(08:12) uh that became probably for 80% of the customers what we initially gave out as uh starting credit uh when we were partnered with uh the global bank. If customers wanted more than that, the bank would do a bit more credit investigation. This global bank happened to have a very large credit uh corporate credit conser credit. They were a big bank and they understood how to measure credit risk.
(08:36) So, , if they wanted more than the initial allocation, the bank would take a look at what their initial exposure was and continue to move it up as they got more information on them. So, that's how we started. , we migrated over to UBT. I actually had called, not to UBT, to EAC collect.
(08:55) I had called UBT to ask their input as to whether or not somebody could help us with underwriting. We wanted to undertake the underwriting ourselves. We felt like the cost of the premi through the AR insurer was prohibitive that we were having difficulty recovering any claims against it and we made a decision as an entity to go self-insured which meant we were doing our own underwriting uh and assign our own credit risk at that point.
(09:20) , that was uh probably around when I started to talk to Laura. And uh we now use the ezyCollect tool to establish what the credit limits and the underwriting terms are for each one of the clients who come in. It's not only new clients, it's existing clients who may either fall behind or have their account go on hold because they're late.
(09:38) Yeah. Wonderful. Thank you for that. So I will just briefly talk about your experience with ezyCollect so far. Yeah, it's been pretty straightforward. , you know, we have probably four people in the organization that use it. We have uh uh a young professional who's in charge of all of the onboarding, does all of the credit monitoring, all the credit work risk uh work for us.
(10:04) When a salesperson has either a new credit app or an old client whose filters are being held up, they'll call, same name as Caleb, they'll call Caleb to do a look onto ezyCollect to see where they stand in terms of how they're being rated and ranked and whether or not there's any adverse uh events or hits against uh uh against their credit rating.
(10:28) But the product itself and the ability to use it has not been that painful. you know, it was, you know, maybe a half an hour uh demo in terms of what to look at and how to get onboarded and we've got a handful of users who were using it. So, I would say there wasn't a lot of friction around using the app and you know, we're kind of anxious, frankly, to see the rest of the integration, you know, with our CRM product, you know, with uh uh with Netsuite. But at this point it's it's been very helpful both in terms of
(10:58) expediency and being cost elective to help us start to assign credit to these people on our own. Wonderful. Yeah. Well, I'm glad to hear it and yeah, don't worry the Netsuite integration is coming soon. So now let's pivot a little bit and talk about some of the red flags and best practices associated with credit risk on boarding.
(11:29) So we're going to start with some of the red flags and things that you might I guess, the signs that a business might be not the best credit risk or that you might want to start with a lower credit limit. So, some of these are some of these red flags I'm going to be talking about from experiences that I've had, but I'll also be talking to you, Joe, about some of your experiences. So, let's get started.
(11:55) So, one of the biggest red flags is a history of frequent late payments. So I know I've spoken to hundreds of accounts receivable businesses during my time as a salesperson at ezyCollect and there's a common perception in a lot of industries that late payments is the norm in certain industries like construction supply where it's like you know we you know we get paid late because the my customers themselves are being paid waiting to get paid or you know really big customers are always going to paid late. Do you just got to
(12:31) have to, I guess, manage your cash flow in such a way that takes that into account? So, I guess I'm going to ask you, Joe, like in your experience, how true is that perception that it's normal for businesses to pay late? And yeah, what do you think of that? Well, I think the perception is real. If you allow customers to pay late, they will pay late.
(12:55) late payments, I would say at Brookaire a bit of an exception. , we put a lot of emphasis on keeping the aging as current as possible. We send out statements once a week. We do follow-up calls routinely. If, uh, our AR staff is not getting a positive response back, it gets escalated. , we will put accounts on hold, meaning they will not get filters until they bring the account current.
(13:20) Uh, our customers know that the contract with us is that we will deliver filters the next day. We would like to be paid within the window of what the agreed upon terms are in the beginning. We have exceptions. We do have customers that I would say are not strict about meeting the terms.
(13:41) to be honest with you, you know, those are customers that we work harder at in terms of not giving them probably the same favorable discounts as other customers might get. but by and large our entire focus is on keeping the AR in the current buckets and aggressively going after customers uh who are beyond terms or beyond uh we the cuto off for us is 60 days.
(14:04) If a customer hits 60 days uh that's a customer that's beyond terms for us and the organization puts a lot of emphasis on bringing that back current. Yeah, that I mean that makes complete sense. So, one of the examples here of how to know whether someone's a late payer before you actually on board them is if in a credit report it contains data on trade payment history.
(14:34) And so in this example here, we can see that there's a high percentage that are paid late. Aside from using a credit report or this kind of thing, is there any other way that you could get signals that someone might be a late payer before they actually start trading with you? Uh there's signals, but they're not definitive, Laura. So, the best is a brief experience.
(14:54) So, if you've got a customer, a new customer with you for 60 days, that'll give you probably enough early insight into what their payment history might be like. But prior to sending out the first order, other than a uh you know, a credit report, you could look up trade references, but trade references aren't going to be totally forthcoming, especially if they've got a bad history with somebody. So, we don't put a whole lot of weight into uh uh trade references.
(15:22) So, you know, what we do is we start new customers relatively small and keep them relatively current until they've created a payment history that we think is dependable. One of the signals to us that we get uncomfortable with is if either they don't sign the credit app, which goes to them as one of the first steps, or if they start to strike out certain clauses or rewrite the credit app.
(15:46) You know, the credit app, as I said earlier, is effectively our purchasing contract. That tells them what our terms are, that uh we protect our intellectual property, that they promise to abide by what our terms might be. So, if they start to push back on the credit app in the beginning, that's a red flag.
(16:06) If in the first 60 days, if uh they're not meeting their terms, that's a red flag. Uh but by and large, what we'll do is start to slow down the delivery of product if we think that they're not meeting their terms of uh the initial agreement. Yeah.
(16:23) No, that I mean you've kind of also started going into the best practices thing, so I'll I I really appreciate that and we'll definitely get more into that a little bit later as well. So, another one of the red flags that we come across is length of operation. Of course, a new startup business is at a higher risk of failure than one that's more established.
(16:49) But one of the things you told me about Joe that was actually a learning experience for me was the fact that a lot of businesses will incorporate in order to try and hide bad payment history. So can you tell me a bit more about your experience with reincorporated businesses and why are they high-risk? It typically happens with the smaller customers, maybe uh HVAC contractors or smaller contractors where they might file for bankruptcy, they might go through a dissolution.
(17:24) but what you'll see is in in an effort to avoid debts, they will uh either reincorporate or they'll go through some type of either uh acquisition or or some new corporate enterprise where you have the same principles and the same staff people and maybe even the same underlying customer base. and they will come up to us and ask us for the same terms.
(17:45) We don't typically give the same terms to a new reincorporated company that we may have to an existing company. There's no credit history. we can't pursue them legally under a new federal ID number if they've reincorporated. So when a company comes to us who uh with a new launch who's reincorporated with the same customers, the same product, the same address, uh we move rather slowly with them. We will give them initial credit.
(18:13) , but it'll probably be the typical uh 5,000 in 30 days and then we'll watch them closely for the first 60 days. , but by and large we want to make sure that we got paid from the predecessor company uh and b that they're not looking to establish a new credit score, you know, under the legal protection of the new entity.
(18:33) So, we're not negative about the reincorporation, but it'll just raise some additional due diligence that we want to do about why former principles or former managers were reincorporated under a new brella. So, they could be at high risk. they could be absolutely fine, but we'll watch them until they get some uh runway with us until it has some history with us. Yeah.
(18:57) So, aside from you recognizing that someone's reincorporated because you've met them before under a different entity, if someone comes to you for the first time and you've never really met them or interacted with them before, is there a way that you can tell that they're reincorporated? No. Uh, I mean, we do Google searches if we find it unusual, but beyond that, , we're not doing any legal, uh, search. We're not doing a Lexus Nexus.
(19:22) You know, we're not checking principles against what other companies might own. You know, it's a bit of a red herring if you go down that rabbit hole a bit in terms of trying to get connections. You know, there could be entities that own six or seven companies that may or not be connected to uh the entity that's seeking credit from us.
(19:42) So, , we don't, uh, do the work around matching the principles to any of their predecessor companies, you know, as much as we do it, you know, with somebody who's looking to buy new filters, who's coming to us with a new tax ID number and uh, and reincorporated. So, I mean, that's what we do now. We haven't been hurt too badly by that.
(20:00) So, you know, if we find that there's any softness in that approach, we'll go back. But, you know, for now, we're taking a pretty stiff look around the reincorporated entities, but you know, people that have come out of other companies, we're not looking at what other entities they might own. Yeah, that makes sense. Yes.
(20:20) I would have thought and I guess the way you've explained it makes a lot of sense. Like I would have thought, oh, yes, you can go into a credit report and see what other businesses they've had, but like you say, those businesses might have nothing to do with this one. So, yeah, it's a good point that you shouldn't go too far down the rabbit hole on that.
(20:40) So, you've already touched a little bit on this. So, , evasiveness and just the way that a business might communicate with you can sometimes, , identify some, I guess, something unusual about them that means that again, it's not necessarily that they are a bad business or that they're a high risk, but it's one of those little data points that you use for your due diligence.
(21:07) So, , you were saying before, Joe, about people wanting to strike out certain terms and conditions in a credit application or being unwilling to complete a credit application. What are the typical terms that they're trying to get out of? Well, they don't want to agree to the term, but what I typically see when people strike it out is they don't want to be held to the terms uh that were provided, meaning legally held.
(21:36) So the credit app requires their agreement and their signature on it that says I promise to pay you in 30 days and I promise to you know that I'll repay you up to a credit limit of 5,000 and I you know I I know you have full recourse. Sometimes they'll strike that out because they don't want us chasing them if they get to 60 or 90 or 180 days.
(22:02) So, you know, what they're doing, you know, uh, occasionally they're trying to run from our ability, uh, to perfect our claim against what they've agreed to in the credit app. So, if they strike it out, and some have, it's a signal to me that, uh, they don't want to be held to uh, what the standard terms are. , you know, typically that's the most common thing that they'll strike out in the credit app. Occasionally, they don't want to provide a trade reference.
(22:24) That's a little bit of a trade reference, but what they're really uh doing is trying to strike out what we're doing to perfect our claim and to uh uh to get our money downstream if they're not paying us. Yeah. Yeah. I know that would definitely be a worry. So, this is an interesting one here. So, this is one I actually have personal experience with.
(22:52) So ezyCollect itself also uses our own credit on boarding forms for our own new customers and because we also offer payment solutions uh we often get like fraudulent businesses coming to us wanting to use us for money laundering and fortunately it's actually quite easy to spot when they're fake and so so sometimes you know they'll they'll come claiming to be like you know uh let's say like US Concrete Supply.
(23:24) com is the real business name and the real URL of a legitimate business and they will take the name of the person the real owner of the business on LinkedIn and then they'll have a slightly different email domain than the real one. So it might be usconcreteupply.net or like us-conretupply.com. And if you're not careful, you might think, "Oh, it's the real one." and get excited because they want to sign up immediately.
(23:51) And fortunately, ezyCollect also has a good internal risk process. So I've seen it flagged enough times that now I recognize the signs and I find it quite fun to sometimes go on a bit of a sleuththing mission and find out who's really behind it. , I guess Joe, do you ever find that in your industry that you have people trying to spoof real businesses? Uh, yes, but not through the customer portals, not through the customer websites.
(24:24) We see it more , frankly trying to come in through email that they may say, uh, , what they'll do is they'll get somebody's name who works here and they say, you know, I'm Laura Walker. You know, Joe, can you change my direct deposit details? And we know right away it didn't come from Laura Walker, you know, so we'll see that from time to time. We've not done that or been susceptible to it.
(24:46) We do validate the websites. uh we have not seen a breach or any type of fishing event that uh would come through uh the customer portals and remember a lot of what we're doing are larger entities and you know their hospitals, their schools, their governments, you know, not that people can't replicate either the websites or the identities but we've not seen a lot of that coming through the sales process.
(25:09) uh but we do validate the websites and uh uh their folks can come through our website as well and they'll be validated that way but not as you're uh identifying it here Laura. We don't see too much fraud or scam coming through any of the customers or any of the customer websites.
(25:27) I Yeah, I guess that makes sense based on your industry. It's probably quite specific to us as a payment processor that we get quite a lot of that. , one thing though, , from a fraud perspective for, , especially supplying to the construction industry, I've seen a lot of construction businesses, , or suppliers to construction businesses have like stolen cards being used to try and purchase stuff for resale.
(26:02) and then there is a chargeback when the original owner of that card recognizes the transaction and then the thief has gotten away with $5,000 worth of product that they're going to resell. I don't know if that's something that you've ever encountered at Brookaire Joe. Uh no, although we use uh credit card intermediaries that do a lot of the fraud protection for us before they'll issue the approval.
(26:29) So if a card is either stolen or fraudulent, it typically does not get authorized and it does not get charged. So we don't see a lot of uh stolen cards, you know, we see a lot of virtual cards or single-use cards that customers are now inclined towards, you know, where they'll give us the value of the invoice on a credit card, you know, through their bank. They're not fraudulent.
(26:47) They're absolutely legitimate and they'll come that way. But if there is fraud, it typically is filtered or caught by the credit card intermediary and it doesn't make it as far as our process. Yeah, that makes sense. So now let's talk about some of the best practices associated with having a strong credit onboarding process.
(27:13) So we've already touched on this a little bit. You mentioned that you've been using a digital credit application for about three months now. Joe, so I know that you're now using ezyCollect one, but you were also using jot form before us and then you were using paper before that.
(27:35) So maybe to start with, what made you switch from a paper form to digital? We wanted to standardize the credit collection process, you know, the data collection process, so we could start over time to evaluate the responses that we're getting and whether or not there was a pattern on some of the defaults or late payments based on the data they were giving us up front.
(27:59) We wanted to make life a little easier for the customer base, too, to do a digital form online where they can use a digital signature and submit it that way rather than signing a piece of paper and PDFing it. was really the way to get uh I believe uh better compliance and better adoption from the customer base. So we have an overall strategy at Brookaire where we try to make everything to digitize the customer experience a lot more advanced and a lot easier and faster on behalf of the customer. We also did it with an eye towards monitoring credit on a real-time
(28:31) basis. So if a new company comes in and I take either a paper credit application or a digital credit application a year from now their credit rating could be different. It could be better, it could be worse.
(28:50) And you know with ezyCollect we have the ability to get uh real-time information in terms of how hits are coming to uh you know to the credit sites you know what's going on with credit safe for some of the other agencies. So we wanted the ability to see is there a new bankruptcy uh is there a default that somebody had that got registered with you know one of the a so we wanted the ability to have real-time credit monitoring and we felt that the ability to do that from the front end on the credit app process and on an ongoing basis was the best way to start uh modifying that. So, we're trying to get away from customers submitting papers. They still do. , but more and more are
(29:26) adopting the digitized credit app and so far the adoption I'd say has been pretty good. Not a lot of complaints or not a lot of push back on it at all. Yeah, I definitely think it's sort of beneficial both to the customer and also to you because yeah, it's easier for them with less friction, but also they can't strike out terms in a digital credit application.
(29:50) It's like you take what you get. So, you also mentioned this briefly. So, I think you said that your sort of starting terms is $5,000 30 days. Is that given to all of your customers or do you have exceptions to that? There are exceptions. somebody with bad credit uh might be asked to pay with a credit card in the beginning until we give them any credit at all.
(30:22) larger entities, you know, with a good credit history will come in. We have people ask for as much as 150,000 to start. so, but it is typical for us to start with 5,000. It can move quickly. If we see a good 3 to 6 months of payment history, we'll start to increase it.
(30:43) if they have big orders that want to come through, we'll allow the order to go through, but we'll leave the lower credit uh limit in place and then increase it over time, but we toggle it. And what we mean by that is we look at the initial payment and ordering activity to see if it's sufficient and we'll continue to move it if we think the customer is a good partner and uh is paying over time. We don't want the credit process to have a chilling effect on the sales process.
(31:07) And there's always a little bit of this dynamic where sales wants to sell, you know, and we want to collect. So, you know, somewhere in the middle, you got to give sales the latitude to be able to tell customers they've got credit. You've got to have the latitude to allow customers to have the credit that they need, but you got to be prudent about how you're underwriting and issuing credit to people.
(31:30) That money has to get collected, and it costs money to follow it. So, it's a pretty good rule that we've adopted and uh we'll stay with it until, you know, we find that it's not sufficient for our needs. But, you know, for roughly 12-,500 active customers, it has worked fairly well so far. Yeah.
(31:50) And you mentioned that when you start someone off small that you're doing a lot more, I suppose, monitoring of them. Can you tell me what that looks like? How frequent are we talking? Do you review them every week or every month? No, we review them monthly. Uh, you know, the AR aging is in monthly buckets.
(32:13) It's current and 30 to 60 and 60 to 90 the same as everybody I'm sure who's on the call is doing. So, we look at aging several times a day. And we look at new people to the aging. We look at acceptance to the aging. So, I will look at the uh 30 to 60 uh aging bucket to see if any new clients have aged into it.
(32:32) Uh if somebody gets into the 60-day bucket, the AR team calls them. You know, our strict religion here is to keep the Asian current. If somebody hits 60 days, that's a failure either on their part or on our part. but we do look at customers who enter either the 30 or the 60-day bucket. I'll go back. I'll look at every piece of communication whether or not they're getting statements.
(32:58) Do we have the statements going to the right address? Do we have the follow-up going to the right address? Are we doing the phone calls to the right phone number? Occasionally get an alignment problem. What that means is you don't have the right email address or the right phone numbers and invoices might be going to the wrong place. But if the invoices are aligned properly and the phone calls are going to the right place, you know, then you may have to put the account on hold until they understand that they've got to pay for these within the terms that they agreed to upfront.
(33:21) Yeah, I mean it sounds like a very rigorous process. So, it makes sense that you've been that successful. Now, you mentioned that you don't particularly think trade references are that important, but you still get them. I know you told me the other day that you still do get every customer to give you trade references.
(33:45) So, even if you don't check them, why is it important for them to actually give them to you anyway? Well, I want to see that they've actually got trade references that they'll provide. First of all, I want to see a willingness for them to be transparent and to give us full disclosure, and I want the option to call a trade reference, you know, in the event that uh we're not getting paid or we think that uh they're having difficulty. we want the optionality to call them.
(34:10) It wouldn't be a good use of my staff's time to call trade references in the beginning. I do get calls and I try to give as honest a trade reference as we can give. You know, we don't try to give bad preferences, but if you have a difficult client, it's not going to surface, you know, from a trade reference.
(34:28) They're not going to tell you that somebody owes them money or that they're late. , it would be unusual. the credit uh reporting modules, you know, will be far better at telling you when people are days beyond terms or, you know, if they've got a dollar value that's outstanding on their credit, but we do want to collect them and retain them the same way we do it with bank references just to see that they're going to be transparent and come forward with us, meaning be forthcoming with us uh in terms of providing these partners to us. Yeah. Yeah, that makes sense. So, do you ever call them like once you've seen
(35:01) that a customer is a bad payer or is having problems? Is that when you might call them? I have, but it's been infrequent. I'll call a trade reference if I'm not getting a response from a direct customer. So, we've had customers who go radio silent on us, who owe us money, uh, who aren't responding to the AR followup, who want, and I make the calls if it gets to a certain point myself.
(35:22) So, if I feel like a customer, you know, is gone underground, meaning they've cut off all communication, I will call a trade reference to see if they're still in contact with them. I may or may not get a frank response. but I'll try to find out whether or not they're paying other customers or not.
(35:48) Uh but typically once they go underground and they stop responding to us we'll pay very very close attention and contemplate sending it to collection or sending it you know uh to the attorneys. Yeah that makes sense. So now that you're using ezyCollect for credit checking, one of the things that we provide is a credit report and this can be used for both new customers but also existing customers and a credit report contains a lot of information.
(36:20) So are there particular things that you look for in a credit report? like do you read the whole thing or are there particular things that you will scroll down to to particularly focus on? I look mostly at the risk score. but we do look at some of the other items. To be honest, I think credit safe has a way to go in terms of having a mature database. I think that will populate itself over time.
(36:42) So we don't put a lot of weight into for instance the credit limit score. We do the underwriting ourselves once we understand the risk score. , but we do look at the activity. You know, it gives us information that we may have either missed in the credit app, , or not seen. , but typically we try to see how they're scored.
(37:01) We want to see what the typical payment beyond terms are, we want to see if they have dollar values that are outstanding for other customers. You know, we do look at OFAC, you know, to see if they're, you know, the enemies of the Office of uh, foreign asset control.
(37:19) Obviously, we want to make sure we're doing some measure of uh KYC with these customers to make sure that they're not using us. As you said, they were trying to use you. but by and large, we wait the risk score more than any other one uh box that I would see on the uh uh the credit score report. Yeah.
(37:41) And then when it comes to doing a credit check on an existing customer, so is it mainly when they go into that 30 or 60day bucket that that happens or is there something else that would trigger you to do a check on an existing customer? Typically, they're over 60 and they want to put in another order.
(38:04) And if they do that, we will ask them for payment on the old order before we fill the new order. If it's a large enough customer, customer customer Caleb will, you know, our credit monitoring representative, he will go back on and he will take a look at what the credit score is to see if anything's been updated. But I could have a customer who's an existing customer who's a 5-year customer who all of a sudden had financial difficulty in the last 90 days.
(38:26) I would not necessarily hear about it if we didn't go in and take a look at an updated credit score. And we do that. So, if a customer's filters are on hold, their account is on hold and they haven't paid us for some period of time and they want to put through new filters, we'll take a look to see, and we do this frequently, this is not infrequent, to see if their credit score has changed or if we think that they become a higher risk customer than maybe we thought they were when they came on board several years ago. So, it's not just for new customers and onboarding
(38:56) that we use credit scoring. We use it for customers who were beyond their terms and who are still trying to buy filters from us. Yeah, that makes complete sense. So , thank you so much for sharing all of this, Joe. Now, I'm going to really quickly talk about something. It's not as relevant to you, but is relevant to a couple of industries.
(39:19) so we work quite a bit with the equipment hire or equipment rental industry for them and for or I would also say for education and some other industries having capturing payment authorization at the time of them signing up can be a great way of ensuring that you keep getting paid on time and that is something that can be done through the ezyCollect credit application.
(39:50) So, I'm also going to really quickly just summarise what ezyCollect currently has available uh in terms of credit risk tools for UBT members. So, we have a partnership with Credit Safe. And so, what this allows is for you to do a lookup on a business. You can request a credit score and a credit report. And it will show, like Joe said, the risk score. If it has trade payment data, it will also talk about average days beyond terms.
(40:17) So, if there's a lot of businesses with the same name, you'll be able to select the correct one and filter by address. And then when it comes to the credit report, you do actually get a credit report with every credit score. So, there's no real reason why you shouldn't get that at the same time as your credit score, but it will go into risk, more information about the risk.
(40:49) It actually contains quite a lot of info about trade payment history, what industries they're purchasing from, how their days beyond terms changes over time, as well as directorship information. And we've just released the digital credit application. So it is an onboarding form that we can design for you. So it would have your branding. You can ask for any information that you want.
(41:14) as Joe probably attest like we were working with Caleb to specifically replicate the original Jot form application and even you know certain requirements like maybe tax-exempt businesses have certain things you might want to ask versus non- tax exempt. So there's a lot of flexibility in this in this application and you can also capture payment details if you want and that is something I know Joe mentioned briefly he's looking forward to when phase two for this credit application is coming out which is I think it's scheduled towards the end of this year
(41:52) which is the integration back to Netsuite. So when you approve the credit application it will set up the new customer account. So that is coming uh pretty soon. So yeah, you'll be able to uh review, approve, reject all the information within ezyCollect. And yeah, so that's the credit risk tool.
(42:19) We do have other tools as you probably are aware but we won't go into those today. I know we are getting towards the end so I'm going to ask any questions. I think we have one question that's just popped up which is how is this process this program different to a platform offering trade credit insurance such as Euler Hermes Allianz Trade? So how is it different from typical credit insurance? Well you're probably the person to answer that Joe. Yeah. Okay. it's not that different.
(42:52) It gives you the underwriting uh ability, but there's no insurance uh uh component to it. So with somebody like Euler or Allianz you know effectively you pay a premi and on top of the premi you pay for uh underwriting risk meaning you pay Allianz or Euler for the ability to do the diligence work and to do the credit reporting.
(43:16) uh what the reason we went to ezyCollect and what we use today has no insurance component to it because we didn't feel that frankly it was a user-friendly product that gave us the ability to to recover claims against it. So, we also had a pretty good paying customer base.
(43:35) So, we didn't feel like there was a lot of return on the value of the premi that we're paying. But, Euler and Alianz charge you for, uh, the insurance piece, which is a hefty piece because they're underwriting for insurance loss, and a smaller piece for, uh, credit underwriting. We at Brookaire took on the credit risk ourselves and we do the underwriting in concert with the tool at ezyCollect and we've been doing it for a year and it's been transparent. It's not different.
(44:06) we haven't made a lot of dramatic changes that the customer can see. We're probably tighter now than we were under Allianz, you know, in terms of how diligently we look at this. but the platform is a little different in that what we're using it for is mostly just underwriting. So yeah, thank you so much for that.
(44:28) any other questions? I think we have time for one more. This question again is to Joe. Joe, if you had to recommend or give a piece of advice to someone when they're doing credit on boarding, what would your number one piece of advice be? I think it's imperative not to approve products going out the door until you've got a completed full credit app.
(44:55) The credit app is the first contract that you sign with your customer that's going to give you the information to get paid. If you start with your first series of orders without enough information to get paid, you're going to be chasing that customer for a long time and frankly antagonizing that customer until you get all the pieces of data that you need so that you can understand, you know, the tax exemption and how they're going to pay and what their days are and how you're going to start aging their account and you know, they're going to
(45:25) start aging, you know, and not paying. It's going to be an uncomfortable relationship if you don't frontload the information uh as tightly as you can. So, the best piece of information we can give is get your information up front before you start fulfilling orders. if you can digitize it, it's not that hard to do. We did it.
(45:46) We did it with ease, we did it in both ways, your customers will appreciate it. It'll save you some heavy lifting and some time. but you know the onboarding process, you know customers should understand that your companies have to get paid and their obligation you know is to pay you in exchange for you providing a good product and a good service.
(46:09) So uh we're a little stricter than that. Uh meaning we sustain that as much as we can. I don't think we're aggressive or militant about it. But if patients go beyond terms, we're calling them and uh we're pursuing the money and we're holding product until they get current.
(46:26) So, you know, we do that because we think that there's both an ethical and an economic reason for them to pay us and and uh uh we hope that they abide by that. So, excellent. Excellent. Awesome. and then we have one final question which is uh do banks recognize the easy click service in the same way as you alian for borrowing? That's an excellent question.
(46:53) You know the banks take comfort in the fact that you've got AR insurance because it can sustain cash flow in the event of a spate of bankruptcies or dissolutions. , what the banks don't understand, I've gone through this with the banks, is that the ability to actually perfect a claim against some of the AR insurers is very, very difficult. You are not insured for 100% of your receivables.
(47:16) You're only insured for what would be deemed good receivables. The banks take some comfort in their underwriting when they're trying to do uh risk underwriting when they see uh underwriting insurance because it gives them comfort that there's a secondary layer of cash flow in the event that a large receivable goes uncollected. So no I don't think the banks have the same understanding of the process with ezyCollect and for instance Brookaire who's now self-insured as opposed to what went on but they'll look at it as something larger than that. The banks with us look at our days in AR.
(47:54) Our days in AR are around 42 or 43 days. We don't write a lot of activity off. We don't send a lot of accounts to collections. We're pretty good about boxing in and getting paid, you know, within the terms. When they see a credit history that is well contained and well managed, they don't need to fall back on the uh Euler or on the Allianz uh methodology.
(48:19) But yeah, they do take some comfort in seeing that there is some AR insurance. It'll take some explanation to get past that. Yeah. Excellent. Thanks for that, Joe. Yeah. Well, thank you so much Joe for taking the time to speak with us today and sharing your wisdom.
(48:43) I just wanted to know we've gone slightly over time, but I just wanted to tell everyone still on the call. if you're interested, uh ezyCollect is offering three free credit reports and scores to anyone who was here. So, if you want to use the QR code, you'll be able to claim that. , it does not require any commitment to an ongoing subscription with us.
(49:07) Although, I mean, of course, we would love uh for you to sign up with us, but you don't have to. But if you're interested in just getting some credit reports for free, uh I highly recommend it. It does contain quite a bit of information. I suppose just to quickly wrap up, , Joe, is there anything else that you think our listeners should know when it comes to, , I guess the secret to getting paid on time? No, I think you covered it.
(49:34) I think, you know, the technology in combination with a good repetitive and recurring process will help keep your receivables current. I think if you follow your process, your AR will stay current. If you start to make exceptions, you're going to have your AR starting to age. So, , but you need a tool to do it.
(50:01) You know, we are not professional underwriters, so something like the underwriting tool you're giving us gives us the ability to get smarter about it. uh but we use your tool in combination with a slow start with a lot of the customers to allow us to gradually increase credit limits over time but if you follow your process I think your risk will be managed rather well. Wonderful. All right. Well, thank you so much Rohit, anything to add? No, just thank you guys.
(50:26) I appreciate everyone for joining the call today and special shout out to you Joe for really giving us a ton of sage wisdom here. Uh it's been really invaluable. Thank you so much. You're welcome. All right. Well, have a great day everyone and good luck with your onboardings. All righty. Right. Take care. Bye. Take care everyone. Bye.