[00:00:00] Speaker A: The Canadian government has a goal to double exports to non US markets over the next 10 years and it will support this with investments to improve supply chain and strategic infrastructure projects for the Canadian economy. To achieve this $300 billion goal, Canadian business is going to have to move out of its comfort zone and seek new business in markets they have not explored.
Today on the Tradesecurity podcast, we're going to discuss how to go global with confidence by focusing on three pillars. I'm Janet Eastman. My guest today is Hanif Patel. He's a credit and collections expert who's been in the industry for over 30 years. Welcome to Trade Securely Hanif.
[00:00:45] Speaker B: Thank you, Janet. It's good to be here.
I enjoyed our earlier discussion and I'm glad we're talking about this now because businesses do face a very different set of realities when they move into new markets and how credit and collections are handled in those unfamiliar environments that can make all the difference to the long term success.
[00:01:18] Speaker A: We're going to break this conversation down into like three pillars. So I guess the first pillar is really understanding the balance. So, Hanif, in the past you have said that collections is a balancing act and collections only fail when the relationship ends. So explain what you mean by both of these statements, please.
[00:01:42] Speaker B: When I say collection is a balancing act, it simply means that you're holding two responsibilities at the same time.
On one side, you have to protect the interest of the institution.
On the other, you have to preserve the working relationship with the customer.
If either side is ignored, the outcome usually turn negative.
As a matter of fact, in real life, what usually changes first is the customer's behavior.
Long before an invoice becomes overdue, it shows in the way they start to communicate. They take longer to respond, they give shorter answers.
Sometimes they stop giving clear reasons.
That is when you know the situation is beginning to shift.
At that point, you still need to protect your position, but you also need to keep the customer talking.
That is where the balance really sits. Being firm enough to protect the institution, but careful enough to keep the customer engaged.
Once that engagement is lost, recovery becomes very difficult.
That is why I say collection only truly fail when the relationship ends.
When communication stops and you are no longer able to work anything out and not when a payment is delayed.
[00:03:26] Speaker A: Okay, so you mentioned a couple of little red flags there that people can watch for. You know, when your communication starts to change, their answers get shorter. So those are, those are little red flags that you got to keep your rating up for, right?
[00:03:41] Speaker B: Indeed. Indeed.
[00:03:42] Speaker A: Okay, let's talk about pillar number Two, which is extending credit with respect for risk. Okay, so when establishing new customers, there's always an upfront cost that the salesperson pays in time and effort, developing that relationship.
So how should the cost of making a sale be evaluated? Because the salesperson is going to see it differently than the credit manager.
[00:04:09] Speaker B: Ah, yes.
Well, as I would say, you know, the cost of making a sale should not be evaluated only by the effort it takes to win the customer.
That is where the salesperson's view naturally sits because they focus on time and energy required to secure the order.
From an institutional point of view, the cost continues after sale is booked.
It shows up in how the customer services their repayment over time.
Do payment come in as agreed? How often are extensioning requested? Requested?
Do disputes appear frequently?
And how much effort is required just to keep the account regular?
A sale that looks successful at the point of booking can become very expensive if it requires constant follow up, repeated rescheduling or ends in partial recovery.
That is why the cost of sale has to be evaluated jointly by sales and credit together, not in isolation.
It is the only way to make sure the sale supports growth without introducing avoidable risk later on.
[00:05:46] Speaker A: Okay, so the key goal then of extending credit is to get a sale. So how should a business do this? Effectively, to support both the customer and their own business so that credit is extended without risking institutional trust. And what are some of those challenges?
[00:06:08] Speaker B: I would say, you know, when a Canadian business extends credit to a new customer outside North America, it does so without the comfort of long trading experience.
The decision is therefore based on what can be verified at the start.
The customer's financials, their market standing, their references, and whatever safeguards can be built into the transaction.
See, there are two part to it. When Canadian companies export physical goods, many first transactions are structured under letter of credit.
That does reduce payment execution risk at the transaction level.
But that protection is only as good as the documents, the issuing bank and the absence of political or currency restrictions.
And in sosis, where there is no shipment or banking triggers, payment is almost always on open credit.
That is where exposure becomes largely behavior and contractual rather than transactional.
At that stage, the institution is really looking at the basic credit fundamentals.
Who the customer is and how they conduct business, their capacity to pay, their capital behind the business or the conditions they operate in, and the form of security available.
That is how the first credit decision is shaped.
The challenge is that when everything looks fine at the beginning, actual payment behavior only becomes clear. Once business starts.
Market can change, cash flows can tighten External pressure can influence how customer meets their commitments.
That is why the most practical approach is to start with sensible limits, observe performance, and then adjust gradually.
In this way, you support the sale without exposing the institution beyond what early performance justifies.
[00:08:55] Speaker A: Okay, so you're, I like that idea. You know, you look at, you look at your customer and you go, okay, well, we don't really know them, so here's how much credit we're going to extend. But I guess the promise is there to that customer. Like if, if things are going along nicely and everything. Yeah, we can, we can get you to the level that you want. But right now we gotta start here, right?
[00:09:16] Speaker B: Yeah. Like they say, you know, test the water.
[00:09:19] Speaker A: Yeah. Okay. Okay. And this is also kind of where credit insurance can come in too, because if you have a credit insurance policy, your underwriters will look at this customer and say, this is, this is a good credit risk. This is not a good credit risk. And, and you adjust from there.
[00:09:40] Speaker B: That is the way to look at it because, you know, evaluation is, is the most important thing.
[00:09:47] Speaker A: Okay, let's talk about pillar number three then. When pressure enters the room.
So when payment isn't forthcoming, how do you effectively ask for the money?
And when should you start this conversation? And I've had conversations with people in the past about this, and it seems that the big fear is actually going forward and saying, where's my money?
Right.
[00:10:12] Speaker B: Well, I have a different point of view here.
When payment does not come in on time, the first thing that matters is how the conversation is started.
Note how forceful the demand is.
This difference becomes even sharper when you compare goods shipped under banking instruments with services delivered on open credit, where recovery depends almost entirely on communication, cooperations and just jurisdictions.
The time to raise the issue is as soon as you sense that something has changed on the customer side, you place the fact on table and you ask a simple direct questions about the delay.
Once the reason is understood, the discussion becomes much easier.
You can then agree on realistic date, a short plan, or one clear next step.
If this is handled early and calmly, recovery usually stays manageable.
When that conversation is delayed, the situation almost always become harder to control.
[00:11:43] Speaker A: Okay, I want to, I want to run a couple of scenarios here so that people understand.
Let's say that, let's say your payment terms are 30 days.
Leading up to that 30 days, everything is fine. You get beyond that 30 days, you haven't been paid.
And you also notice that you know anything that any engagement with the customer, like those little red flags we talked about before is starting to get, it's like the, the conversation has changed a little bit. So at that point you say, you go forward and say, you know, we're past 30 days, just wanted to check in, when can we expect payment or how do we go? Is there a problem? And that's how you go about this.
Respectful, asking for the money? I guess, yes.
[00:12:30] Speaker B: I, I think you, you've, you said it right, because this is called judgment. You know, you, you understand, you know where the situation is going. So inquiring earlier and keep the communication open, that will give you some kind of indication if the payment will be coming on time or is there some problem we should anticipate ahead of time.
[00:13:06] Speaker A: Okay. And I guess too, the sooner you ask those questions and get that conversation rolling, the likelier it is that you're going to get payment because there are going to be other people that probably aren't getting paid as well and maybe they're having the conversation. So the money goes to them, right?
[00:13:25] Speaker B: Absolutely. You know, one of the things that in consumer banking that we were practicing, the priority of the customer, it depends on the priority of the customer.
What is a priority is the mortgage loan will be paid first or the autocorre auto loan or the credit card payment will be paid first. So that's, that's where you stand and you have to realize what is your standing in front of the customer.
When the cash flow is tightened, then customer would try to prioritize the payment to the preferred vendor. Yeah, this is where you want to be first in line, not the last in line.
[00:14:17] Speaker A: Yeah.
Okay, so let's talk a little bit about etiquette because how do you collect in different cultures? Because they may not have the same collection etiquette as we have in North America. So what things should be considered like when you're, you know, your recourse mode of collection, how do you recover the money? I mean, you work all over the world. Hanif so how does the etiquette change?
[00:14:44] Speaker B: Well, when, when collecting in different cultures, the objective obviously remains the same.
But the approach has to change.
What works in North America may not work at all in other markets.
The first thing to understand is who should speak to whom and how.
Because in some cultures, only a senior level call carries weight.
In others, nothing moves until something is put in writing.
The next consideration is the mode of collection. Some markets respond well to a phone follow up.
Others require local representation in person, contact or formal notices.
Then comes the question of recourse.
In some countries have seen legal action is fast and predictable.
But in others it is slow, uncertain and used only as a last resort rather than a practical recovery tool.
Cross border recoveries work best when local knowledge is used properly through local advisors, legal counsel or experienced in market teams.
When culture, communication and legal recourse are aligned, recovery becomes realistic.
When they are not even strong claims can become difficult to enforce.
[00:16:36] Speaker A: Okay, so you said something there about having you know somebody within that market who can help you do collections.
And that's another role that credit insurance can play because they often have people, your credit insurance provider often have people in those countries who can help you do that collecting. So that's really interesting to have that person that is in that market help you do that recovering.
[00:17:03] Speaker B: Absolutely. That is your grounded reality that you can utilize to the best.
[00:17:11] Speaker A: Yeah, having somebody walk through the door as opposed to send you an email or a phone call from the other side of the world, it gives it a little more human touch.
[00:17:19] Speaker B: I think it works 100% of the time based on my experience.
You go make a personal visit is effective more than anything in the world.
[00:17:33] Speaker A: Yeah. Yeah. Okay. What's your key takeaway from everything we've talked about today? Hanif, what's your key takeaway here for listeners? Because ADM business businesses are going to be getting out there testing out other markets. And what's your key takeaway?
[00:17:50] Speaker B: Well, the key takeaway is this.
In new markets, credit and collection problems rarely appear all at once.
They build through small changes over time.
Payment begins to stretch slightly, explanation becomes shorter, commitment starts to shift.
These are the early warning signals that appear long before default.
As long as communication stays open, most situation can still be managed.
Once communication weakens, the room to work things out becomes very, very limited.
In practice, recovery is often decided much earlier than people realize.
Well before an account reaches a formal default stage.
Once it reaches that point, normal conversation and adjustments are no longer enough to correct the situation.
As more Canadian companies expand into new and less familiar market, these early warning disciplines becomes even more critical.
That is why the real work in collection is done long before an account reaches that crisis stage. That's my key takeaways.
[00:19:18] Speaker A: Okay Hanif, I'm going to throw in one last question for you before we end our conversation here. But we mentioned right at the start that collections only fail when the relationship ends. But then we have talked about the cost of making a sale and keeping a sale.
So my last question to you. Is there ever a point when the cost is just too high and the relationship has to end?
[00:19:48] Speaker B: Yes. Because when you have passed you way beyond your acceptable levels or, you know, imminent write offs.
This is where you have to put a full stop because all the efforts that you would put in will just, you know, you're throwing good money after bad money.
So that's, that's where you have to, you have to understand, do we need to further pursue on this particular account or we just call it off?
[00:20:29] Speaker A: Okay. Hanif, I've really enjoyed talking to you. You've made everything very, very clear here. I think it's going to be very helpful to the Trade Securely listeners. So thanks very much for taking the time to share.
[00:20:42] Speaker B: I'm glad I was here. Really had given me an opportunity to express my lived experience of 35 years.
[00:20:50] Speaker A: Yeah, yeah. I mean, you are a credit and collections expert and it is my understanding that you have a book that's in the works called Mastering Debt Collection Strategies, Techniques and Legal Insights and you expect that to be out probably by second half of 2026. Is that correct?
[00:21:11] Speaker B: Yes, it is in the final stages.
I'm getting it publisher ready.
And let's hope, let's hope because you know, this book is based on my 35 years inside institutional credit and collection. It's not menu, but a reflective narrative on how debt collection actually works when pressure enters the room.
So let's hope it's out by the tentative date that I have put in.
[00:21:43] Speaker A: Okay, great. And perhaps we can chat again when the book is out. Good luck with it. Hanif, thank you so much.
[00:21:49] Speaker B: Oh, yes, I. I really look forward to that. And thank you very much for this opportunity.
[00:21:53] Speaker A: You're more than welcome.
I'm Janet Eastman. Thanks very much for listening to the TradeSecurely podcast. Please share it with your friends and colleagues as they may find it helpful. You can find business news tools to help you trade and grow securely at TradeSecure CA or get a stronger understanding of how trade credit insurance can support your business as it trades and
[email protected] we have courses there to help you do that. Follow us on LinkedIn @Receivables Insurance association of Canada or subscribe rather to our YouTube channel channel at TradeSecurely. That is our show for today. Thanks very much for joining us. And remember, trade securely.
