Report: Outsourcing Commercial Collections Adds to Company Value

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Engaging the services of a commercial collection company is about safeguarding the assets of a company, which is imperative for any company's financial well-being, according to a special report from global accounts receivable management service provider Euler Hermes ACI.

Engaging the services of a commercial collection company is about safeguarding the assets of a company, which is imperative for any company's financial well-being, according to a special report from global accounts receivable management service provider Euler Hermes ACI.

"Effective collection of receivables is crucial to improving a company's days sales outstanding (DSO), which condenses the revenue cycle and creates working capital and additional borrowing capacity, thus adding value to the company," said Michael T. Puckett, President of receivables outsourcing provider Euler Hermes UMA. Euler Hermes UMA is the commercial collections arm of the Euler Hermes ACI organization.

In the report, titled "The 411 on Outsourcing Commercial Collections," Puckett explains that many companies - whether large or small - do not have staff with the necessary expertise to effectively manage the commercial collections function. "Internal credit management staff members typically are not trained for collection, which requires excellent communication skills to maximize efforts," he said. "By using an established provider of accounts receivable management, a company can keep its internal credit management staff focused on the function for which it is trained. Additionally, through outsourcing, a company can eliminate in-house costs in a way similar to utilizing a payroll company or benefits management provider."

Puckett also stressed the need to establish a good collections reputation with customers as part of an effective accounts receivable management strategy. "Early placement policies and systematic pursuit of slow and non-payers will announce to customers and prospects alike that your company is serious about collecting what is due for goods or services," he said. "The opposite perception is no advantage in the marketplace."

Businesses across the nation are beginning to experience problems collecting on invoices, as evidenced in the April Credit Manager's Index survey from the National Association of Credit Management. "Weakness in collections suggest that businesses are having cash flow problems, reflecting the erosion of the economy as a whole," said Euler Hermes ACI Chief Economist Dan North, who provides commentary and analysis for the monthly economic survey. "Credit managers are starting to feel the effects of a deflating housing bubble and a slowdown in the economy caused by the Federal Reserve's monetary tightening. This is evidenced by businesses in both services and manufacturing that have been particularly hard hit by the slowdown."

Accounts receivable typically represent more than 40% of a company's assets, so naturally they constitute a vital component of a healthy business, said Puckett. "Cash flow, earnings, and capital will be harmed if a major customer is unwilling to pay its obligations, or if several customers are unwilling to pay their invoices. Thus, employing an effective strategy for accounts receivable management -- with the right commercial collections partner -- can protect the cash flow of any company, large or small," he concluded.

Note: The full text of the special report on outsourcing commercial collections - which is featured in the Spring 2007 issue of the bi-annual publication Foresight - is available upon request from the Euler Hermes ACI Communications Department.

Euler Hermes ACI is North America's oldest and largest provider of trade credit insurance and accounts receivable management solutions and is the US subsidiary of the Euler Hermes Group. Headquartered in Owings Mills, MD, the company protects and insures more than $150 billion in US trade transactions annually. Additionally, Euler Hermes ACI provides a suite of receivables management services that includes commercial third party collections, receivables management outsourcing, and international collections. For more information, visit http://www.eulerhermes.com/usa.

Euler Hermes is the worldwide leader in credit insurance and one of the leaders in bonding and guarantees. With 5,500 employees in 49 countries, Euler Hermes offers a complete range of services for the management of customer receivables and posted a consolidated turnover of 2.01 billion euros in 2006.

Euler Hermes, a subsidiary of AGF and a member of Allianz, is listed on Euronext Paris. Standard & Poor's rates the group and its principal credit insurance subsidiaries AA-.

Press Contact:
Rick Ostopowicz
Euler Hermes ACI Public Relations and Communications Specialist
Phone: (410) 753-0652

These assessments are, as always, subject to the disclaimer provided below.
Cautionary Note Regarding Forward-Looking Statements: Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words 'may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue' and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz SE's core business and core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults (vii) interest rate levels, (viii) currency exchange rates including the Euro-U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. The matters discussed herein may also involve risks and uncertainties described from time to time in Allianz SE's filings with the U.S. Securities and Exchange Commission. The Group assumes no obligation to update any forward-looking information contained herein.

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