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At a Glance
MPW Industrial Services, a growing, privately-held industrial services company with more than 3,000 workers nationwide
Credit & Collections Manager, MPW Industrial Services, Lee Tompkins
- Manage portfolio risk in troubled industries
- Maintain a nuanced understanding of customer financial health to maximize profitable sales opportunities and inform MPW credit terms for financially challenged accounts
- Communicate timely, accurate data to CFO
- Relies on CreditRiskMonitor® as an essential tool in his credit information “toolbox”
- Contributes trade data to track risk across all MPW portfolio accounts
- Uses FRISK® score, all reports, and expert user skills to obtain the data his finance organization needs to approve orders and mitigate risks
- Employs creative credit solutions to enable sales that might otherwise be deemed too risky
- Alerts sales and CFO to material changes that may affect sales and credit policy
Targeting Credit Risk in Troubled Industries
MPW Industrial Services offers industrial cleaning, facilities management and water purification services to thousands of clients across North America.
Lee Tompkins, Credit and Collections Manager, manages the order-to-cash cycle for over 500 customer accounts, many in troubled sectors like energy, paper, and steel. Supporting sales while keeping risk at bay requires a nuanced approach, especially with many customers whose financial health is challenged.
Read Lee’s story to learn how his team successfully manages risk. Best practices include:
- A varied toolkit, including real-time financial data updates, and other time-savers
- A creative process for setting credit terms, and other risk management strategies
- Strong relationships with key stakeholders, from customers to collections to sales
Find out how the credit team at MPW Industrial Services targets risk in troubled industries, and how CreditRiskMonitor® enables their success.
Lee Tompkins isn’t your typical credit manager. He’s heard this repeatedly throughout his financial career, and now, as Credit and Collections Manager at MPW Industrial Services, his unique approach to managing 500 customer accounts — including many in risky industries — illustrates just how true that is.
Founded in 1972, MPW Industrial Services is a privately held company offering industrial cleaning, facilities management and industrial water purification services to thousands of clients throughout North America. MPW experts develop technology-based services that get the dirtiest, most challenging cleanups done at lower cost and with less risk. The company is based in Hebron, Ohio, with more than 3,000 employees in over 70 locations.
When Tompkins joined MPW in 2015, he brought 25 years of credit experience and an innovative credit philosophy that relies equally on accurate, real-time data and building strong relationships with key stakeholders, from customers to collections to sales.
Struggling industries require nuanced credit analysis
As a credit and collections manager, Tompkins says, “the same challenge is always there: you’re trying not only to turn invoices into cash from a credit collection standpoint, but also to mitigate risk in a portfolio.” Yet it’s not always so cut and dry. Financial conditions change fast, and MPW’s portfolio includes many public companies in business sectors where accurately evaluating customer financial health can be difficult.
Industries like paper, steel, and energy have recently been challenged by slow economic growth, and in the case of energy, unprecedented liquidity problems. As a result, one-fifth of all of MPW’s receivable dollars are tied to companies that have FRISK® scores in the red zone. Tompkins’s job is to constantly monitor them and look for the “gray areas” so he can help the sales team make deals work.
In these troubled industries, relying only on an arbitrary credit score cut-off or the Altman Z-score can cause you to get too negative, too fast. To account for the industry-wide challenges many MPW customers face, Lee uses CreditRiskMonitor® to take other factors—like their days past due, payment index and scores, and FRISK® score—into account. CreditRiskMonitor® “is constantly monitoring your portfolio for changes, risks, solvency, upheaval, and liquidity concerns. Information that guides you in your day-to-day, and your quarterly or annual reviews, as it relates to extending credit and collecting money,” Tompkins says.
Using CreditRiskMonitor® is like getting out in the field and wearing a helmet. It’s required to do this job effectively.
Creative terms help make the sale
Tompkins has spent time in the field with the sales team, getting familiar with their challenges and building relationships. Trust, he believes, goes a long way toward helping you both manage risk and exploit opportunity. “When you’re the credit manager of any organization, you can have an adversarial relationship with sales, or you can have a very supportive one. It’s always been my style to explore every avenue that I can, to make a sale occur, and not say no,” he says. For good customers, this might mean increasing credit limits. For riskier customers, it could mean asking for a down payment or offering discounted terms in exchange for faster payment.
For instance, last year a client had receivables on the books deep into six figures. Planned seasonal services would have exposed MPW to hundreds of thousands of dollars more. Around the same time, the company acquired another struggling company and its risk of bankruptcy skyrocketed. Fortunately, CreditRiskMonitor® alerted Tompkins in time.
To mitigate MPW’s risk, Lee offered the customer aggressive payment terms. As a result, when the company filed for bankruptcy approximately six months later, MPW’s risk exposure was in the low five figures, down from a high of over a half million dollars. “When I think of the money spent on CreditRiskMonitor® as compared to what we could’ve been hit with,” Tompkins says, “the savings are huge.”
Trade data puts MPW's A/R in context
As a trade contributor, MPW contributes trade files from multiple divisions and receives customized reports on its dollar risk exposure based on CreditRiskMonitor®’s analysis of that data. Tompkins says, “The thing that CreditRiskMonitor® does, that has such value, is the slicing and dicing of your portfolio, not everyone else’s.” On top of that, trade data gives you “that ability to look at your hidden slow payers, predicted slow payers, and receivables at risk, and see the number of customers and dollars involved.”
When I think of the money spent on CreditRiskMonitor® as compared to what we could’ve been hit with, the savings are huge.
Custom reports simplify credit review
The Hidden Slow Payers, Receivables at Risk and Receivables Snapshot reports are particularly valuable when Tompkins needs to provide his CFO with key metrics for understanding portfolio risk. He also appreciates being able to download customized data from CreditRiskMonitor® into an Excel spreadsheet when he and his CFO review credit limits by customer. In addition to viewing all the necessary financial metrics, they can easily see historical and seasonal trends, and even relevant industry data by SIC code.
Tompkins also relies on CreditRiskMonitor® data to create a special one-page report that his CFO uses to evaluate credit limits beyond a specific credit granting authority. His customized snapshot depicts creditworthiness at a glance with a color-coded, graphical presentation of relevant data, including FRISK® score, Altman Z"-Score, Moody’s rating, days past due, key ratios, total revenue, net income or loss in previous year and return on equity.
Tompkins recommends new users take a look at the tool for just a few days to “quickly see the added value of being able to support your finance and sales organizations. It’s not just risk mitigation; it’s growth, too.” Then experiment with how you can customize it to serve you best. “Using CreditRiskMonitor®,” he says, “is like getting out in the field and wearing a helmet. It’s required to do this job effectively.”
We thank Lee Tompkins for his loyal and innovative use of CreditRiskMonitor® since 2008, and we look forward to supporting his team for years to come.
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At a Glance
TTM Technologies, Inc. is a $3 billion Fortune 1000 global manufacturer of printed circuit boards.
Director of Credit, TTM Technologies, Inc., Kyle Migdal
- Obtaining information on private companies
- Time management and daily work flow
- Backing up credit decisions when working with upper management
- Analyzing trade data on private companies
- Reliance on the FRISK® score as an indicator of risk
- Using the financial information provided by CreditRiskMonitor® in decision making
- Trade Contributor Program
- FRISK® Score
Incorporated in 1998, Time-To-Market Technologies, Inc. (“TTM Technologies”) has grown and evolved in two decades’ time into a global manufacturing leader of printed circuit board technology. With 29 facilities spanning North America and Asia, TTM Technologies is one of the largest manufacturers of printed circuit boards in the world today.
Printed circuit boards are in everything from smartphones, automobiles, communication networking systems, aerospace and defense. As a result, TTM Technologies is a supplier in high demand with both public and private companies, from every corner of the technology field.
Navigating a Diverse Portfolio of Startups and Veteran Businesses
The technology field is rife with startups and long-time companies competing for credit. Kyle Migdal, TTM Technologies’ Director of Credit, is no stranger to navigating between the two. “Right now we have thousands of accounts, and we get new accounts every day,” said Migdal. “Many of them are startups.”
Supplying companies of all sizes, Migdal uses CreditRiskMonitor® to acquire and analyze the decision-making information he needs, on demand: “I review customers on a daily basis, and when I need it, I get the information I need right from the site.”
Migdal has access to all the financial data needed to make credit decisions. Regular access to news updates, stock market volatility measures and financial ratios make it easy to extract the information Migdal needs when assessing the credit worthiness of a potential customer.
Quality Information that’s Easy to Analyze, Package and Present
Credit professionals like Migdal are often stressed for time due to their day-to-day responsibilities. A small percentage have team members to aid in the process of assessing counterparty risk – most operate solo. In either case, time-saving services are essential in the realm of credit management.
With CreditRiskMonitor®’s FRISK® score, Migdal is able to focus solely on the companies that pose a potential threat to his portfolio. “If a company has a FRISK® score of, say, a 5 or less,’ I know I need to take a deeper dive into their risk,” said Migdal.
Having access to valuable information streamlines Migdal’s process, making it easier to make credit decisions and convey to his superiors why he’s made a particular credit decision. He’s then able to back up proposals to act – and stand pat – with sound evidence.
The CreditRiskMonitor® system is designed so that credit professionals can download the information as is, or they can download and integrate the information into their own format. Migdal prefers the latter: “On public companies, all the information is right there,” said Migdal. “I analyze it, put it into my own package, and if someone has a question, I can answer it.”
If a company has a FRISK® score of, say, a '5' or less, I know I need to take a deeper dive into their risk.
Contributing Trade Changes the Game for Both Public and Private Companies
TTM Technologies has been contributing trade data to CreditRiskMonitor® for the past two years, and having access to trade data makes CreditRiskMonitor®’s service that much more valuable to Migdal. With trade data, Migdal is able to take decision making on public companies to the next level, and the trade data also proves an asset for monitoring the private companies in his portfolio.
“It’s made my review process more timely and complete,” said Migdal. “I have access to more data than I would have otherwise when it comes to my private customers.”
These days, Migdal is able to back his credit decisions when dealing with private companies with the information extracted from his company’s trade data in snapshot form – with one visual. He can easily discern where high-, medium- and low-dollar risk lies in his portfolio. Being a trade contributor also gives Migdal the ability to see how his accounts are paying TTM Technologies versus other vendors. Finding “hidden slow payers” who might pay on time but others late – or vice versa – can be a blatant indicator of risk.
Customer Service Makes CreditRiskMonitor® the Right Fit
It’s one thing to have 24/7 access to company news updates and financial information. But it’s an added feature to be able to ask any and all questions about CreditRiskMonitor®’s service to a dedicated Account Manager. Since TTM Technologies is a global company with many accounts all over the world, navigating the credit waters can be challenging. Migdal looks to our Manager of Trade A/R Projects, Joseph Iveli, and the resources CreditRiskMonitor® provides.
“I get personalized service, and that’s one thing that sets CreditRiskMonitor® apart,” said Migdal. “If I have a question, I call no matter what time of day it is, and I get an answer.
“Joe Iveli and my Account Manager Corine Doohan walk me through every service feature that CreditRiskMonitor® provides, and it really makes a difference.”
I get personalized service, and that’s one thing that sets CreditRiskMonitor® apart. If I have a question, I call no matter what time of day it is, and I get an answer.
Wish List and Advice
It’s not uncommon for Kyle Migdal, power customer, to ring up CreditRiskMonitor® as needed to talk through not only his findings via the service, but also what he believes would improve the service based on his time working within the subscriber site. Iveli, who normally fields these calls, has taken note.
“There’s no such thing as too many calls from a client,” said Iveli. “We’re always happy to chat with someone with Kyle’s level of enthusiasm for learning the science behind the data. The success he’s enjoyed in recent years is proof of the value you can harvest from using our service by being curious.”
“Our service has improved based on Kyle’s feedback, no question,” said Iveli. “We welcome Kyle’s and our other customer’s insight. When your clientele pushes you to be better, you respond to the call or you lose the client.”
When asked if he thinks that he’s part of a good working relationship with CreditRiskMonitor®, Migdal added his last remark:
“You know, I’d really like you guys to come here and do my job for me,” said Migdal, in jest. “Realistically, when I call Joe really works to help me with everything I ask for.”
As for advice for other members of the credit profession, and especially for those starting out in the field, Migdal’s is direct: “Pick up the phone and call your customers. This job is built on relationships, and relationships start with a conversation.”
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At a Glance
Celanese Corporation, a $6.8 billion Fortune 500 chemical industry leader based in Dallas.
Global Credit Manager, Celanese Corporation, Mark Walker
- Manage risk globally across the entire business
- Assess customers and vendors around the world, including Europe and Asia
- Review contracts and set payment terms
- SAP’s credit management module along with diverse information sources
- CreditRiskMonitor® is their first stop for risk assessment and research
- Use the entire service—from scores to company reports to debt payables and more
- Also contribute trade data to monitor their own accounts receivable—Mark is a fan of the “hidden slow payers” report, which highlights accounts that pay you well but others slowly
- FRISK® score to stay on top of public company counterparties
- Trade Contributor Program to get a true grasp of their accounts receivable and any dangers within
- Peer analysis to discover alternative, superior counterparties for which to redirect lines of credit
Celanese Corporation’s tagline is “The chemistry inside innovation.” That describes not just the products, but the people — including the global credit group led by Global Credit Manager Mark Walker. Mark and his team are driving innovation through processes, automation and use of diverse data sources as they provide critical support for the company’s entire business.
Celanese, founded in 1918, is a Fortune 500 company and a global technology leader in the production of specialty materials and chemical products that are used in most major industries and consumer applications. Based in Dallas, Texas, the company is one of the world’s largest producers of acetyl products, intermediate chemicals used in nearly every major industry. It is also a leading global producer of high performance engineered polymers used in a variety of high-value applications. It employs about 7,400 employees around the world, primarily in North America, Europe and Asia.
A fast growth environment
Celanese is growing fast, with revenue of over $6.8B, recently closing a record Q4 in 2014 and exceeding earnings per share in the first quarter of 2015. The credit team Mark leads plays an important role in driving that growth — and he’s justifiably proud of that. “Credit is considered a critical function at Celanese,” he says. “We are viewed as an essential business partner and support all businesses, including the procurement team.”
Mark heads a worldwide team of experienced credit professionals in locations as diverse as Germany, Brazil and China. Their primary mission is to manage risk to the overall company. They assess risk of customers and vendors globally, review contracts and set payment terms — with a particular eye on high-risk accounts. The team is highly experienced Mark himself has an MBA along with 25 years of experience in finance, analysis, systems development and organizational development, in addition to his credit expertise.
We love CreditRiskMonitor®. It compactly gives us the data we want in a standard format, and helps us stay cutting edge. We have avoided a lot of bankruptcies.
Keys to credit success
Mark sees a few keys to the team’s success. A primary one is automation, including the use of credit scores. Since arriving at Celanese almost 12 years ago, he has been instrumental in leading the move to SAP’s automated accounts receivable module, which he loves. “It streamlines our work and makes us more productive,” he says. The team combines SAP with an in-house scoring model to prioritize risk. “We consider our model, our team, and our approach a real advantage,” Mark says. “We’re almost to the point where we can automatically evaluate customers to mitigate risk. We had record low losses during the last economic crisis.”
An absolutely essential piece of the team’s approach is using diverse data sources. Mark believes in multiple perspectives and using the right data for the right purpose. He uses a variety of broad-based and industry information sources — with CreditRiskMonitor® as the team’s first stop.
When I’m researching a company, it’s the first place I go… it’s all standardized in presentation, and it’s global. I cannot use something U.S.-centric with our business. I also find the corporate linkage very helpful.
CreditRiskMonitor® works for the team
“We love CreditRiskMonitor®,” he says. “It compactly gives us the data we want in a standard format, and helps us stay cutting edge. We have avoided a lot of bankruptcies.” He has been using the service since the early 2000s and brought it to Celanese when he joined the company. “I have been a fan every since I first started using it!” he says.
In addition to having information from CreditRiskMonitor® fed into SAP, the team uses most aspects of the service regularly. “We look at debt payables, all the scores and the company overall snapshot,” he says. “When I’m researching a company, it’s the first place I go. The big benefit is it’s all standardized in presentation, and it’s global. I cannot use something U.S.-centric with our business. I also find the corporate linkage very helpful.”
In addition, Celanese is a trade tape program participant, and provides their accounts receivables to CreditRiskMonitor®. Mark regularly looks at the risk analysis provided back, and is a particular fan of the “hidden slow payers” risk reports. “I use those every month,” he says.
Wish list and advice
His advice for other customers? Make sure you’re getting the most you can out of the service—and definitely go to a user group meeting if you can! “The user groups are very helpful. There is no replacing face-to-face networking. They are great and you should have more of them.” He’s even sponsored one at his location and encourages other users to do the same. (If you’re interested in this possibility—please reach out to VP of Client Services, Christopher Chach, at email@example.com.)
Mark’s wish list for CreditRiskMonitor is simple—stay on top of what’s next and continue to support the team’s strategic focus on automation. “Automation, combined with the right data, has made our department and our industry much more proactive. We can look forward and be predictive instead of depending on history. It would be nice to use cloud computing to be able to deliver more information without going to the CRMZ web site. That would definitely benefit us.”
We look forward to continuing to support Mark, his team and all of Celanese as they create the chemistry that enriches all of our everyday lives. Thank you for using CreditRiskMonitor®!