Building the Business Case for Debt Compliance

 

Since all CFOs will want to understand why the current debt compliance process needs to change and see a quantification of the benefits that our services provide, we have developed the following process for building a persuasive business case for our services:

  1. We have a preliminary discussion on your existing debt compliance process and needs.
  2. Based upon this discussion, we have a 45-60 minute web demo of our services tailored to your needs with some indicative pricing.
  3. If you want to proceed further, after we send you our NDA or we sign your NDA, you:
    • Provide conformed copies of your debt agreements so we can price our services for them
    • Provide your existing debt compliance work (covenant lists, questionnaires, calendars, etc.) if you want us to see whether we can build off your work
    • Answer a 12-minute questionnaire on your debt compliance practices
  4. We review with you a first draft of a business case with firm pricing for improving your debt compliance practices that includes:
    • A benchmarking analysis of your debt compliance practices against companies with similar credit ratings and debt from the over 400 respondents to the AFP Debt Compliance Survey
    • A technical default expected loss analysis given your credit rating and debt volume based upon the latest annual S&P default and transition rates study.
    • Several different service proposals with firm pricing for determining the least cost solution for applying our services against your debt agreements and risks, as not all services need to be applied against all agreements
    • Key terms of our service agreement
  5. If you like what you see, we agree on the desired level of services for which debt agreements and you:
    • Provide us with the company’s debt issuance costs to bracket against our implementation fees to show the reasonableness of our pricing
    • Confirm with Controller’s that the implementation fees can be capitalized with the debt issuance costs or as software development costs
    • Confirm our default risk and expected loss estimates or provide your own estimates
    • Our final proposal presentation will reflect our joint agreement on the recommended least cost services and the arguments justifying them.