Secure sales by means of legislation on guarantees !
Philippe Mc Vean – Treasurer & Credit manager INGENICO
Multinational group leader in the market for payment and secured transaction solutions, Ingenico annually delivers over 2 million terminals worldwide. A look at the main advances in the legislation on guarantees with Philippe Mc Vean, Group Treasurer & Credit Manager.
What advantage is there for a creditor to make use of legislation on guarantees ?
Philippe Mc Vean : A company that has a guarantee has preferential rights over other creditors, which is a real privilege. In particular the legislation covering guarantees overcomes the uncertainty of the means of enforcement which are not always effective should the debtor default. Cabinet ARC’s expertise can be very helpful in offering advice for putting guarantees in place.
What are the advantages for your company when it holds guarantees, business collateral or debt pledge agreements ?
P.McV : Guarantees are not used by our company because our terminals are manufactured by subcontractors and are then distributed to banking partners or distributors. We therefore secure our payments upstream. However, we do use collateral with companies with low creditworthiness.
When we open a customer account, we check its solvency. If it is unsatisfactory, we make use of collateral, which allows the client to avoid making a cash advance. But the use of collateral is possible only with our French partners. With our foreign customers, of which there are more, we have to find other solutions: irrevocable letters of credits, stand-by letters, interest bearing deposits, etc. You have to be creative and innovative in order to strike a balance between developing sales and the risk to the company.
Are you satisfied with the innovations introduced by the reform of the legislation on guarantees ?
P.McV : The legislative reform is a step in the right direction. The key is to continue make the commercial relations secure in order to develop business under the best possible conditions.