iti @smu guest lecture series strategic b2b credit … b2b credit risk management 1 part 3 payment...

THE PUBLISHER OF ‘GLOBAL CREDIT MANAGEMENT – AN EXECUTIVE SUMMARY’ IN THE CHINESE LANGUAGE

www.T3PLIMITED.com and www.T3PLIMITED.net

© Copyright 2011 BarrettWells Credit Research

ITI @SMU Guest Lecture SeriesStrategic B2B Credit Risk Management

1

Part 3Payment Risk

Assessment & Management

in the 21st Century Ron Wells

International Trading Pte Ltd

Singapore





AGENDA

2

• Payment Risk Assessment• Payment Risk Mitigation• Receivable Portfolio Management





3

Credit Risk consists of two main elements;

namely Performance Risk

and Payment Risk.





4

Credit Risk cannot be eliminated it can only be either retained or changed into another type of risk; a class of

risk judged to be easier to bear safely.





5

REPUTATION RISK

PRICE OR MARKET

RISK

CREDIT RISK

OPERATIONAL RISK

COLLATERAL RISK

RISK

TRA

NSFER

RIS

K T

RA

NSF

ER





People and the Future

6

Organisations would love to mechanise credit risk assessment. Those that take the alternative approach will always have a sustainable competitive advantage,

and will likely out-survive the former.

PD x EAD x LGD = EL takes no account of people or the unknowns of the future.

Relationships that are strong, transactions that are win-win in concept, and in-depth knowledge and understanding of counterparties; these are the foundations of long term business success.





7

Basel II Credit Risk

PD

EAD

LGD

X

X

Probability of Default (PD)

Exposure at Default (PFE)

Loss Given Default (LGD)

= EL

Expected Loss





8

Why do companies fail?





9

Incompetentor

Dishonest MANAGEMENT





10

• Being out of touch with reality• Large technical knowledge but poor

commercial control• Great talents in salesmanship• Strong-willed• Sumptuous living and unreasonable

withdrawals of cash from the business• Excessive risk-taking

Common Attributes of Failing Management

von Stein and Ziegler 1984





AGENDA

11






GRANTING POST DELIVERY CREDIT IS AN INVESTMENT DECISION

A decision to grant Credit should be the result of a strategic assessment intended to assure competitive advantage accrues to the firm.

Trade Credit should not simply be an incidental outcome of the sales process, a company must

have a sound reason to grant credit.





REASONS TO GRANT CREDIT

• Product Enhancement• Comparative Cost of Money• Administrative Efficiency• Building Trust• Business Development





B2B CREDIT MANAGEMENT IS A SERIOUS GAME OF

‘WHO CONTROLS THE CASH’ In order to win the competition with customers

for control of the cash after delivery;Means, Motive and Opportunity to pay are

the three fundamental ideas a corporate credit manager needs to understand.





DUE DILIGENCEThe first priority before accepting any new customer (foreign or domestic) must be to

ascertain whether it is a genuine business. The full and correct name of the potential buyer, its

registered and main trading address(es) and the names of the owners or active executives must

be established.





Means, Motivation and Opportunity to Pay = M2O

• The means to pay when the invoice is due• The motivation to pay when the invoice is

due• The opportunity to pay when the invoice

is due





Means to Pay• Financial Analysis– Sustainable Cash Flow & Cash Cycle– What is hidden or not stated?

• Strategic Analysis– Management Quality– Business Model– Competitive Position– Customer/Supplier Quality & Concentration– Parent or Associate Support

17





18

http://www.barrettwells.com/BWcr%20ACT%20ConfFeb07.pdf

More information about the calculation of Sustainable Cash Flow and Forensic Cash Flow Analysis is available in a presentation found via the link below:

Page 17





Cash Flow Cycle Magic

No Need for a Magic Potion

No Need to be a Magician





The magical Cash Flow Cycle is described as magical because of the way it magically causes cash to disappear.

Left uncontrolled itwill suck in cash

and lock it beyondreach; particularly in

times of risingprices or increasing

sales volumes.





The ‘cash flow cycle’ is the time required to convert goods into cash; from the date the company pays the costs of acquisition of the goods to the date of receipt of the

cash from related sales.

DAYS PAYABLES DSO

DAYS INVENTORY





The FormulaCash Flow Cycle

= (Days Inventory + Days Sales Outstanding) – Days Payables

Days Inventory = Inventory / (Cost of Sales / 365)Days Sales Outstanding = Trade Receivables / (Sales / 365)

Days Payables = Trade Accounts Payable / (Cost of Sales / 365)





An Example - CorusOver the period 2002 through 2004, Corus Group Plc evidenced a

cash flow cycle of between 64 and 66 days. Hence in 2004 as its sales grew by £1.38 billion, the extra cash that

became locked up in its Cash Flow Cycle grew by £250 million. This represents some 18% of the sales growth.

In other words, for every £5 of additional sales Corus locked away almost £1 in additional working capital.





Corus 2005COST OF SALES /

DAY $24mio

PAYABLE DAYS 78

INVENTORY DAYS 82

RECEIVABLE DAYS[ DSO ] 54

CASH CYCLE DAYS 58

WORKING CAPITAL $ MIO 1,392





Some ‘What If?’ IllustrationsCOST OF SALES /

DAY

PAYABLE DAYS

INVENTORY DAYS

RECEIVABLE DAYS

[ DSO ]

CASH CYCLE DAYS

WORKING CAPITAL

$ MIO$24mio 78 82 54 58 1,392

78 70 54 46 1,104(288)

78 82 40 44 1,056(336)

90 82 54 46 1,104(288)

90 70 40 20 480(912)





Growth in sales is extremely cash hungry in every

business; unless the components of

the Cash Flow Cycle are carefully

controlled.





27

How Much Credit?Camilo Gomez PhD

Business CreditMarch 2007





Credit Limit Model

28

Double, double toil and trouble; Fire burn, and caldron bubble. Fillet of a fenny snake, In the caldron boil and bake; Eye of newt, and toe of frog ...





29

EXAMPLE CREDIT LIMIT PARADIGM

• Limit not to exceed 10% of equity amount (shareholders' own funds) of own company.

• Limit must not exceed the requested amount, bearing in mind the customer's normal purchasing pattern.

• Limit not to exceed customer's assessed ability to pay trade related obligations, in the normal course of business, within normal terms. Example formula: (company’s annual cost of the goods) * ((1/(the Risk Score))*0.05. Thus scaling down a limit as the score indicates higher risk.





30


• Limit not to exceed 10% of equity amount (shareholders' own funds) of own company.





31


• Limit must not exceed the requested amount, bearing in mind the customer's normal purchasing pattern.





PAYMENT TERMS & LIMITS

32

Minimum Order QuantityBuyer’s Customers’ Payment Terms

Average Quantity Sold Daily by the BuyerNormal Delivery Transit Time





33


• Limit not to exceed customer's assessed ability to pay trade related obligations, in the normal course of business, within normal terms. Example formula: (company’s annual cost of the goods) * ((1/(the Risk Score))*0.05. Thus scaling down a limit as the score indicates higher risk.





34

www.barrettwells.co.uk/RuEnScrCardCase.ppt

Ideas for the design of a Trade Credit ScoreCard can be found via the Google Search function on barrettwells.co.ukand this case study is available via the following link:





35





36

TRADE CREDIT RATING & LIMIT MODEL

CreditScore TradeCreditRatingLimitas%ofCOG

Supplied*0.50‐0.74 a AAA 10.00‐6.76%0.75‐0.99 a AA+ 6.67‐5.05%1.00‐1.24 a AA 5.00‐4.031.25‐1.49 a AA‐ 4.00‐3.361.50‐1.74 a A+ 3.33‐2.871.75‐1.99 a A 2.86‐2.512.00‐2.24 a A‐ 2.50‐2.232.25‐2.49 a BBB+ 2.22‐2.012.50‐2.74 a BBB 2.00‐1.822.75‐2.99 a BBB‐ 1.82‐1.67

* SE

E F

OR

MU

LA O

N S

LID

E 3

3





THE MOTIVE TO PAY

Make sure there is a motive to pay …..





Creditis anOptionto Default TWO CHOICES





Motive to Pay

What ‘drivers’ motivate someone

to pay after the goods have been

received?

PAYDON’TPAY





Opportunity to Pay

What has to be ‘right’ in order to allow or enable

someone to pay?





Internal Factors

• Invoicing• Transport and

delivery documentation





Country Risk Factors• Host country foreign currency reserves• Foreign currency control regulations• Strategic nature of the

goods supplied• Government stability• Regional stability





Absent M2OIf a potential customer does not have the means and the

motive and the opportunity to pay on time, only authorize deliveries provided payment security is first obtained.

Types of payment or transfer risk security include; payment in advance, letters of credit (confirmed or not), bank guarantees, undisclosed risk sharing agreements or

guarantees, Promissory Notes (avalised or not), Bankers’ Acceptances, Parent Company Guarantees, and credit insurance. Your administration must be excellent.





SELLING RECEIVABLESReceivable risk! Receivable risk!

Fresh Receivable risk here!

Bargain prices!

Anyone for Receivable risk?





Traditional Methods• ‘Non-recourse’ securitization, • discounting, • forfaiting, or • factoring arrangements.

These can be costly to arrange, and may have a negative impact on the weighted average

Probability of Default of the remaining portfolio.





RECEIVABLE QUALITY WILL IMPACT COST OF CAPITAL

Corus Group plc (S&P: BB- / Positive) end 2004 reported the securitisation of certain of its trade debtors as follows:

GBP millions 2005 2004 2003Gross amount securitised: £272m £406m £338m

Less non-returnable proceeds: £272m £275m £215mNet securitised trade debtors: 0 £131m £123m

Other trade debtors: £1,410m £1,070m £847m

Trade debtors on balance sheet: £1,410m £1,201m £970m





What is RequiredA means to sell receivables ‘without

recourse’ and without having to record the transaction as a loan, in compliance with

IAS 39 / IFRS 9.

Moreover, without negatively affecting the overall risk profile of the remaining

portfolio.





48

The Art of Assessing, and Managing Post Delivery Payment Risk

Read full details in Global Credit Management – an Executive Summary available at bookstores and via: http://www.barrettwells.co.uk/bookshop.html

FALKIRK WHEEL





AGENDA

49






50

LETTERS OF CREDIT

….are not as secure as most believe them to be….

Be aware of:• Performance Risk and• Documentary Risk





51

LIABILITY OF ISSUING & CONFIRMING BANKS

Article 7An irrevocable Credit constitutes a definite undertaking of the Issuing Bank, provided that the stipulated documents are presented to the Nominated Bank or to the Issuing Bank and that they constitute a complying presentation:( TO PAY ).

PAY





52

ASSOCIATED RISKS

• 1. The DOCUMENTARY RISK as mentioned before.

• 2. The CREDIT RISK - will the bank(s) be there when it is time to pay?

It is NOT A GUARANTEE OF PAYMENT per se - there are 3 important risks to be borne in mind:





53

Associated Risks• 3. The PERFORMANCE RISK - unless it

is an ex-ship delivery, title has usually passed to the buyer once the vessel has loaded, so the seller is at the mercy of the buyer - if an amendment to the LC is required for whatever reason.





54

PARTIES• Applicant = Buyer.• Beneficiary = Seller.• Issuing / Opening Bank - opens the LC for

Buyer.• Confirming Bank - guarantees the Issuing

Bank.• Advising Bank - authenticates

& advises a credit.





55

CONTRACT RELATIONSHIPS

APPLICANTBUYER

BENEFICIARYSELLER

ISSUING /OPENING

BANK

CONFIRMINGBANK

ADVISINGBANK

ONE

TWO

THREE

FIVE

FOUR





56

OBJECTIVES• Purchases:

– Avoid demurrage.

• Sales:– Retain control of the commodity until an

acceptable LC is in place.– Get paid.





57

KEY LC CONDITIONS-- OPERATIONS PERSPECTIVE --

• Goods Description.• Date of Bill of Lading / Transport Document.• Ports of Loading & Discharge.• Transshipment - Allowed or Prohibited?• Quantity (max. / silent = +-5% / about = +-10%).• Partial Shipment - Allowed or Prohibited?• Documents required (is an LoI allowed?).





PAYMENT UNDERTAKINGS

58

Payment Undertakings are also sometimes called Purchase Confirmations. They ask no more of the Buyer than a simple but separate confirmation that the Buyer will fulfil the terms of the contract with the Seller. A Payment Undertaking does not impose any additional burden upon the Buyer over and above that already agreed in the purchase/sale contract. It is however a separate formal irrevocable document, usually addressed directly to a bank designated by the Seller.





59

PU SECURITY PACKAGE• Buy / Sell Contract.

– Requires Buyer’s Payment Undertaking.– Permits assignment of Seller’s financial rights.

• Seller-Bank Risk Participation Agreement.

• Buyer’s authenticated Payment Undertaking sent to the Bank.





60

PRECONDITIONS• Seller must find two or three banks (at least

one) that are willing to cover or share the particular Buyer payment risk - using only a Payment Undertaking as ‘collateral’ for the exposure.

• The text of a Risk Participation Agreement must be negotiated with the chosen Bank.

• The required PU and assignment contract clauses must be agreed with the Buyer.





61

PU EXAMPLE TEXT IWe, ---ANOTHER-COMPANY--- (hereinafter called ‘---ANOTHER---’ and/or ‘Buyer’), hereby confirm that we have agreed to purchase from ---YOUR-COMPANY---(hereinafter called ‘Seller’) approximately ---AGREED-AMOUNT--- of ---AGREED-GOODS--- at a price to be calculated as below for delivery commencing during ---AGREED-TIME-PERIOD---.

The price calculation in ---AGREED-CURRENCY--- per ---AGREED-PRICE--- OR ---AGREED-PRICE-FORMULA---.

Settlement of the price for delivery of ---AGREED-GOODS--- to ---AGREED-DESTINATION--- (to be finalised by ---AGREED-DATE--- in accordance with the contract).

All as per contract dated ---CONTRACT-DATE--- and subsequent amendments, if any.





62

PU EXAMPLE TEXT IIBuyer Reference ---789012---.Seller Reference ---987654---.

Subject to performance by the Seller, we ---ANOTHER--- hereby irrevocably and unconditionally confirm that we will pay the full invoice amount without any set-off, deduction or counter claim as designated in Seller’s commercial invoice to the account of ---A-BANK--- at ---ANOTHER-BANK--- in ---AGREED-COUNTRY---account number ---456789---, on the due date per the contract being not later than ---AGREED-DAYS--- after the delivery date (delivery date equals day zero), against presentation of Seller’s commercial invoice and the proof of delivery ---(BILL OF LADING FOR EXAMPLE)---.

This undertaking is to be construed in accordance with English law with exclusive jurisdiction in the Courts of England.





63

FEATURES• Unsecured credit terms for Buyer.• No costs to Buyer for providing security.• Buyer’s usual lines of credit not restricted.• Intermediary bank risk and fees avoided. • Limited administrative effort for Buyer.• Seller may choose amount and timing of

retained Buyer payment and/or country risk.





64

ADVANTAGES• SELLER:

– Flexible tool for risk portfolio management.– Costs of cover can be averaged down.– Inadequate lines of credit can be utilised.

• BUYER:– Improved profile with international banks.– Opportunity to build a good payment record.

• COST SAVINGS AVAILABLE TO SHARE.





65

COMPETITIVE EDGE• The Payment Undertaking alternative

provides a foundation upon which a long term relationship can be firmly established between Seller and Buyer.

• The Seller is not limited by the need to manage payment risk exposure attaching either to the Buyer or the Buyer’s country.

• This could be a competitive advantage.





66

Payment Undertakings

Read more on this subject at:http://www.barrettwells.co.uk/payment_undertakings.htmlOr read full details in Global Credit Management – an Executive Summary available at bookstores and via: http://www.barrettwells.co.uk/bookshop.html

FALKIRK WHEEL





NETTING

67

Netting (or 'Set-off') involves effectively using our own perceived credit standing to reduce our exposure to the counterparty. There are four generic types of Netting as we have seen.

Netting is information systems and people intensive, hence costly. It also carries considerable Documentation Risk. When effecting a Netting close-out, it is extremely difficult to ensure all transactions are valued correctly and in real time. Hence it is easy to miss some small losses or windfall gains on a close-out.

Even in relation to negotiations based on ISDA framework documentation, there is a general lack of standardisation of requirements. The result is that the negotiation of Netting documentation proves time-consuming and arduous.





NETTING

68

Settlement Netting that is effective only in respect of items of the same kind due on the same day. It takes effect only on the settlement day.

Novation Netting, in terms of which only like classes of transaction with the same settlement dates may be set-off against each other. It takes effect each time a subsequent transaction is entered into. Whilst risk reducing, it does not address netting on the occurrence of a default by a party.

Close-out Netting which stipulates that if there is a default by either party all mutual trades will be closed-out and set-off immediately. This is the most popular form of Netting.

Multi-lateral Netting which, outside of special clearing house systems, in practice is not generally effective in most jurisdictions.





OTHER POPULAR TOOLS

69

Parent Company Guarantees (PCGs) are usually cost free and areeasy for a counterparty to arrange. However, they are ancillary to theprime contract. Hence lawyers could attack both the principal contractand the guarantee itself, if the PCG were called. Careful drafting istherefore essential. Which entity owns the Assets is a keyconsideration when deciding which entity should Guarantee.Third Party Guarantees are expensive to obtain and to process sothey are less common, particularly in relation to long term supplycontracts.

Credit Default Swaps (CDSs) - also known as Credit Derivatives -are another form of risk transfer to a third party. However the risktransferred and the payment triggers associated with that risk areusually not well correlated with a receivable risk.





70

BUYER

SELLERTradeCard

Patented ComplianceEngine

THIRD PARTYSHIPPER

ORFORWARDER

COFACESWISS RE.

( AA )PAYMENT GUARANTEE

e-PURCHASE ORDER

e-INVOICE

e-PACKING LIST

e-PURCHASE ORDER

WAY BILL( e-CONFIRMATION THAT

GOODS SHIPPED PERPURCHASE ORDER )

THOMAS COOK BANKACH DEBIT

ORREVERSE MT202

CREDIT UPONRECEIPT OF

CLEARED FUNDS(TWO DAYS)

PAPER DOCUMENTS SENT AS USUAL IF REQUIRED

TRA

DEC

AR

Dht

tp://

ww

w.tr

adec

ard.

com

OR

:B

ank

Paym

ent O

blig

atio

ns (

BP

O )

Bas

es: S

WIF

T Tr

ade

Ser

vice

s U

tility

( T

SU

)





AGENDA

71






72

Reasonsto

Care





73

AR Portfolio Examples*• Corus Group Plc £1,201 million

( 17% of total assets )• RD-Shell Group US$31,383 million

( 16% of total assets )• Ahold Group €1,516 million

( 7% of total assets )• Atos Origin €1,569 million

( 32% of total assets )

Atos Origin

AROther Assets

* FY 2004 FIGURES





74

Telecoms ExamplesVODAFONE FRANCE

TELECOM VERSATEL

Trade Debtors (mio) £2,630.0 €9,469.0 €69.6

% Total Assets 1.79% 9.83% 6.34%

% Tangible Assets 4.92% 17.34% 6.49%

% of Revenue 7.94% 20% 10% *

Day Sales Outstanding 29 73 37

* estimate





75

PORTFOLIO CREDIT RISK

2

8

45

2015

5 3 205

101520253035404550

AA A BBB BB B CCC CC C






76

BELARUS UKRAINE POLANDHUNGARY BULGARIA

OTHER PORTFOLIO RISKS

Concentration Risk

Country Risk

FRANCHISE SUPERMARKETINDEPENDENT NATIONAL GROUPNICHE

Industry Consolidation

Globalisation





77

WHAT S&P SAID ABOUT RECEIVABLE PORTFOLIOS

Calculating the amount of capital-at-risk from credit exposure entails an evaluation of a firm’s counterparties and assigning them a credit rating. Standard & Poor’s (S&P) will be augmenting other aspects of its analysis of firms … through the refinement of its methodology regarding capital-at-risk from operations and liquidity needs. Standard & Poor's ( http://www.standardandpoors.com ) November 2002





78

Three Essentials• Understand the characteristics and

dynamics of the portfolio.• Decide the target characteristics of an

ideal portfolio.• Use portfolio management tools and

techniques to extract value from the portfolio.





79

Some Useful Aspects• Exposure by credit rating class.

• Exposure by country or region.

• Exposure by market.

• Exposure by industry sector.





80

A $

500

MIL

LIO

N A

R P

OR

TFO

LIO

A

NA

LYSE

D I

N V

AR

IOU

S W

AYS





81

Extracting Value• Cost effectively accommodating

additional risk

• Reducing the Cost of Capital

• Reducing Working Capital





82

Adding Value

• Cost effectively accommodating additional risk





83

Mitigating Payment Risk Creatively

Providing Competitive Advantage





84

PORTFOLIO CREDIT RISK

2

8

45

2015

5 3 205

101520253035404550







85

RISK-AVERSE PORTFOLIO45

2015

85

2 3 205

101520253035404550







86

SKI-JUMP PORTFOLIO





87

RISK-AVERSE PORTFOLIO45

2015

85

2 3 205

101520253035404550


SKI-JUMP PORTFOLIO





88

POR

TFO

LIO

MA

NA

GEM

ENT

AN

D

CO

MPE

TITI

VE A

DVA

NTA

GE

DP = 2.27





89

POR

TFO

LIO

MA

NA

GEM

ENT

AN

D

CO

MPE

TITI

VE A

DVA

NTA

GE

DP REDUCED TO 2.21





90

POR

TFO

LIO

MA

NA

GEM

ENT

AN

D

CO

MPE

TITI

VE A

DVA

NTA

GE

DP RETURNS TO 2.27





91

Portfolio Risk Management Tools

Workability and Availability





92

THE ATTRIBUTES OF TOOLS THAT WORK

• Have minimal impact – preferably no impact – on the transaction or series of transactions covered.

• Do not require any explicit disclosure to the counterparty.

• Are certain to pay if a guaranteed risk occurs.





93

B2B RISK MANAGEMENT INSTRUMENTS

• Risk Sharing Agreements

• Undisclosed Payment Guarantees

• Single Risk Credit Insurance

• Conditional Receivable Purchase Agreements

• Credit Default Swaps

NOW AVAILABLE:





94

Credit Default Swaps (CDSs)A CDS is a contract in terms of which one party (the purchaser of default protection) undertakes to pay the other (the seller of default protection) a fee for protection against the occurrence of one or more specified events in relation to a third party, called the ‘reference party’. If one or more of the specified events occurs – as evidenced by publicly available information – the seller of default protection will pay compensation to the buyer of protection either through ‘physical’ or ‘cash’ settlement.





95

Petroplus International NV

Moody’s Investors Service

Senior Unsecured Notes rating B3 / Negative Outlook on April 27, 2004

( equivalent to S&P rating B- )

CREDIT DEFAULT SWAP EXAMPLE





96


Electricity Supplier

Purchases a CDS basis ‘if Petroplus International NV defaults in respect of its Senior Unsecured Notes at any time before a specified date (as witnessed by a public announcement of this occurrence) the seller of the CDS (a bank) will pay the electricity supplier €1 million, being equivalent to the average cost of electricity purchased by Petroplus in any one month’.






97


Note there is a lack of correlation between the risk and the structure of the risk mitigant …Petroplus may not pay for electricity supplied but also not default in respect of its Senior Notes; so the CDS will not pay out.

Petroplus may default on its Senior notes but nevertheless pay for electricity supplied; so the supplier receives €1 million, and is therefore effectively paid twice.






98

Receivable Portfolio Management

Read more on this subject at:http://www.barrettwells.com/DayRob%20ARPortfolioMgmtMar07.pdfOr read full details in Global Credit Management – an Executive Summary available at bookstores and via: http://www.barrettwells.co.uk/bookshop.html

FALKIRK WHEEL





DisclaimerJust to emphasise that the opinions, ideas and suggestions expressed throughout this presentation are mine alone. In making this presentation I do not represent any other organisation, my employer, or any other person.

This presentation is simply a sharing of ideas with a view to stimulating a debate, which may lead to the widespread adoption of a holistic, future-oriented approach to counterparty risk management.

Ron Wells





唤醒平衡表上的睡狮国际信用管理实用指南

Huan Xin Ping Heng Biao Shang De Shui Shi Guo Ji Xin Yong Guan Li Shi Yong Zhi Nan

ISBN 978-988-99586-1-9

Awaken the Sleeping Lion on the Balance Sheet an Executive Summary for Global Credit Management





101

Ron Wells wrote Global Credit Management, an Executive Summary published by John Wiley & Sons. This concise work describes effective credit risk management, which too often is a passive and reactive discipline within a company. It includes practical guidance to equip a reader with the basic tools necessary to establish a holistic credit management discipline. The Mandarin Chinese (simplified characters) version of Global Credit Management was published in July 2007, titled Huan Xin Ping Heng Biao Shang De Shui Shi – Awaken the Sleeping Lion on the Balance Sheet. See www.t3plimited.com (Chinese version: www.t3plimited.net) for details. Ron maintains a free access, credit management resources web site at: www.BarrettWells.co.uk. He has delivered numerous presentations relating to credit and performance risk management, and taught several classes in related subjects; see www.barrettwells.com for details. Ron is a Certified Credit Executive (CCE), a Chartered Management Accountant (ACMA), a qualified International Banker (ACIB) and a Chartered Corporate Secretary (FCIS). He participated in the NACM Graduate School for Credit and Financial Management in 1996/97, passed with distinction and was elected Best Student. Ron joined Cargill International Trading in Singapore as Asia Credit Manager for Energy, Transportation and Industry in February 2011. He was Vice President - Credit Risk Management of RBS Sempra Commodities in London from October 2007, and became Executive Director of Counterparty Risk Analysis and Portfolio Management EMEA, when J.P. Morgan’s Global Commodities Group purchased RBS Sempra on July 1, 2010. Previously Ron was Credit Manager for Global Supply & Trading with Chevron Corporation for 16 years. Ron earlier worked for various companies and commercial banks becoming a specialist in financial analysis, corporate credit management, trade operations management and trade finance marketing.