Process Information
While aspects of our appraisal process are proprietary, including a sophisticated computer modeling application, there are five basic principles to which we ascribe. They have helped us deliver consistently accurate valuations over many years and thousands of transactions.
Hilco's five principles for establishing the realistic value of an accounts receivable portfolio.
Principle 1: Get behind the numbers
Our analysts review portfolio data with an eye toward determining:
- the condition of account files.
- whether or not the files are well organized.
- whether "proof of delivery" of the purchased product(s) is available for each account.
- how the actual files will be transferred.
Principle 2: Analyze current collection practices
Our analysts will work closely with your business managers to determine:
- the effectiveness of the internal collection staff.
- experience levels in the credit department.
- whether collections have been easy or difficult, and why.
- whether collection policies were passive or aggressive.
Principle 3: Conduct test audits
Our analysts will do a statistical sampling of accounts and confirm:
- the accuracy of balances.
- whether any accounts are partial-pay.
Principle 4: Study the industry
Knowing as much about your industry, including general market conditions and the competitive situation, is crucial to accurate portfolio valuation. Our analysts conduct independent research and confer with your business managers to identify:
- whether business is strong, weak or neutral.
- what factors might adversely affect or favor the collection process.
Principle 5: Evaluate the products or services
An intimate knowledge of the products or services behind the receivables is essential to determining a realistic valuation. This is especially important when industrial or highly specialized consumer products or services are involved. Our analysts carefully study your product or service mix to determine:
- whether the technology is new or dated.
- whether similar products or services can easily be bought elsewhere.
- the viability and availability of alternative technologies and supply sources.
- whether any extraordinary warranty issues exist.
Hilco Receivables believes in these principles and we use all of the resources at our disposal to apply them in every appraisal transaction. The result is a reality-based appraisal both you and we can trust.