Treasury Management for Business Banking

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Wells Fargo Business Credita Wells Fargo Company
Gayle Dorsey 703.893.2150,
ext. 239 July 18, 2007
gayle.dorsey_at_wellsfargo.com
Lending Program Workshop Presentation
For Federal Aviation Administration
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Wells Fargo Business Credita Wells Fargo Company

• Accounts Receivable Purchase
• Program (Factoring)

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What is Accounts Receivable Purchase Program or
Factoring?
Wells Fargo Business Credita Wells Fargo Company

• Provides working capital financing
• Acts as the customers credit department
• Performs accounts receivable accounting
• Supplements customers collection efforts

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Wells Fargo Business Credita Wells Fargo Company
Features of A/R Purchase Program

• Immediate cash
• Competitive terms
• Reducing Customers Credit Risk
• Credit Management Services
• Professional Collection Services
• Foreign A/R Purchasing
• Government A/R Purchasing

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Types of Businesses Using Wells Fargo Business
Credit - Factoring
Wells Fargo Business Credita Wells Fargo Company
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Wells Fargo Business Credita Wells Fargo Company
Benefits of A/R Purchase Program

• Money resource for customer when traditional
  lending isnt available or meaningful
• Non-recourse purchase of invoices
• Creative structures to meet specific business
  need
• Competitive pricing

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Wells Fargo Business Credita Wells Fargo Company
Characteristics of A/R Purchase Prospects

• Small-to-middle market companies with revenue
  from 1.2 MM to 500 MM or more
• Purchased receivables of 100 M/month to 100
  MM/month

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Wells Fargo Business Credita Wells Fargo Company

• Characteristics of A/R Purchase Prospects

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Wells Fargo Business Credita Wells Fargo Company
Characteristics of A/R Purchase Prospects
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Wells Fargo Business Credita Wells Fargo Company
Characteristics of A/R Purchase Prospects

• On average our customers use our A/R Purchase
  Program for 1.5 years

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Wells Fargo Business Credita Wells Fargo Company
Who Do We Finance?

• Government Contractors needing cash for
• Expansion/Growth
• New Product or Service
• Merger/Acquisition
• Restructure
• Seasonal Sales
• Start-up Business
• Finance Foreign Receivables
• Buyout
• High Leverage
• Turnaround
• Debtor In Possession Situation

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Wells Fargo Business Credita Wells Fargo Company
How Do We Finance Them?

• Little to no emphasis placed on Customer
• Shift credit risk to account debtors
• Direct verification of A/R
• Each invoice accounted for separately
• Notification to all account debtors
• Direct collection of outstanding A/R
• Quick response time to funds diversion

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Wells Fargo Business Credita Wells Fargo Company
How is the Financing Structured?

• Advance rates up to 90
• Pricing based on volume and complexity
• Pricing done on a discount basis based on the
  total amount of the invoice
• Cost directly tied to time individual invoices
  remain outstanding
• Collected reserve released weekly

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Wells Fargo Business Credita Wells Fargo Company
A/R Purchase Program Process
2. Seller negotiates price with buyer.
3. Seller ships goods or provides service to
buyer.
1. Seller and Wells Fargo agree to factoring
terms.
4. Wells Fargo buys invoice from seller,
advancing cash for up to 90 of the value.
6. Wells Fargo sends the remainder of invoice
amount, less fees, to seller.
5. Wells Fargo collects payment from buyer.
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Wells Fargo Business Credita Wells Fargo Company
What is Our Competitive Advantage?

• Wells Fargo name recognition and acceptance
• Ability to transition to ABL or bank financing
• Aggressive pricing on high volume deals
• Simple application process

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Wells Fargo Business Credita Wells Fargo Company
Prospect Benefits

• Immediate access to cash and improved cash flow
• No financial covenant requirements
• Quick turnaround
• Supports high growth
• Allows for transition to more traditional forms
  of finance
• Credit advice - WFBC extensive database
• Credit protection - non-recourse purchases
• A/R accounting provided daily
• Access to WFBC database electronically
• Collection support to speed A/R turn - WFBC
  turn
• averages 35 - 40 days

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Wells Fargo Business Credita Wells Fargo Company

• THANK YOU!
• Gayle Dorsey, Vice President
• 1945 Old Gallows Road, Suite 205
• Vienna, VA 22182
• 703.893.2150, ext. 239
• gayle.dorsey_at_wellsfargo.com