To Your Credit - CIC e-Newsletter

Welcome to the CIC e-Newsletter - Spring 2011

Editor's Message

Dear Members,

Welcome to the spring 2011 edition of To Your Credit!

This is a special edition that focuses on the kinds of information you will learn when attending our National Credit Conference in June. Be sure to read the featured articles on financial statement analysis from Ron Doyle at Millennium Credit Risk Management; credit management tips from Rodger Noel of Credifax, and past President of the CIC, as well as the professional development article from Sari Cantor from Robert Half. We also have several continuing feature articles to help keep you on top of your credit game. These include part 2 of Professor Michel Blanchette's study of financial ratios; lawyer Michael Bergman's explanation of inter-provincial sales and their potential impact on credit management; as well as an article by bankruptcy trustee, Jerry Henechowicz on ponzi schemes and bankruptcy. Last but not least, be sure to read about our premier volunteer, Lorne Booth. Lorne has been a CIC member since 1964 and continues to be actively involved. In fact, Lorne and his wife Ruth, are attending our conference in June.

I look forward to meeting and greeting all of you at our conference in June!

Reggie Delovitch
General Manager

Disclaimer
The views expressed in the articles are the opinions of the writers and contributors not those of the Credit Institute of Canada. Nothing in this publication is intended as legal advice, or tax or accounting advice. Nothing in this publication should be considered an alternative to seeking professional legal or professional advice. You are encouraged to use your judgment in deciding which of the ideas to accept or adopt, and which to reject and ignore.

In this Issue:

Association News
	Members on the Move

Bankruptcy & Insolvency
	Latest Bankruptcy Statistics - Last Quarter 2010

Credit & Collections Management

The Slip, or the Slide?
by Rodger D. Noel, B.Comm., A.C.I.
Most of us started the New Year, determined to make a fresh start in our personal lives, or in our jobs. Unfortunately, 25% of our resolutions didn't make it past the first week, and only 46% will make it past 6 months. We're around the middle of that time frame now. Are you still on track, or have you started to slip? At Weight Watchers, they say "It's not the slip… it's the slide." Although many people may lose their resolve, setting goals for yourself is still good. You are 10 times more likely to attain your goal, as compared to people who don't make explicit goals. But, staying on course requires more than a wish! You have to ACT! ...

Financial Statements - A trap for the unwary or good information?
by Ron Doyle, Vice President, Millennium Credit Risk Management
When current Financial Statements and notes are available on a buyer, the credit decision becomes much easier, or does it? The questions to be answered in analyzing the Financial Statements are: 1) is the company solvent i.e. does it have the working capital to meet its current payment obligations; and 2) is the company generating enough free cash flow to meet its future obligations? To make the determination of creditworthiness, the analyst considers the standard ratios against the norms for the industry using the numbers as presented and explained in the notes to the financial statements ...

Credit Laws

Securing Goods Across Provincial Borders
by Michael N. Bergman
Inadequately recognized by many managers, the effect of the inter-provincial transportation of securitized goods on the legal validity of the security is significant.

The objective of taking security over goods, manufactured for sale and delivery, or for finishing and delivery or simply to secure an account, is to assure payment collateralized by the assets of the debtor...

Financial Analysis

Financial Ratios and Related Tools (Part 2)
by Michel Blanchette, FCMA, CA
Professor, Université du Québec en Outaouais
This is the second in a series of two articles written to provide a quick reference on basic financial analysis tools. This first article presented a five-step approach to financial analysis and focused on liquidity ratios for credit analysis. (For part one, please see the winter 2011 edition of To Your Credit.) This article will focus on leverage and profitability ratios as well as other qualitative tools that are important when determining a company's credit worthiness ...

Focus on Members
	Focus on Our Volunteer - Lorne Booth, CCP (Emeritus) In this edition, we focus on one of our volunteers extraordinaire, Lorne Booth, CCP (Emeritus). Lorne has been an active member and volunteer of the CIC since 1964....

Industry & Economic News

Ponzi Schemes in Bankruptcy
By Jerry Henechowicz, CA-CIRP
Prompted by the financial crisis of 2008, a number of Ponzi schemes have surfaced in the U.S. and Canada. This article explores the characteristics of Ponzi schemes and their significance in the context of a bankruptcy proceeding, in particular it considers Preferences and Transactions at Undervalue as set out in the Bankruptcy and Insolvency Act (BIA) in the context of a Ponzi scheme...

Professional Development

Training Employees When Budgets Are Limited
By Sari Cantor and Sandra Lavoy
As the economy improves, businesses that have continued to invest in employee training throughout the downturn are likely to find they have a decided advantage. Their staff members are more apt to have the necessary skills and knowledge to address changed market conditions, giving their companies a head start on emerging opportunities—and a competitive edge...