UPS Capital Overview

UPS Capital®

www.upscapital.com

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UPS: A Single Source

Transportation and Global Freight Services

Comprehensive Logistics and Distribution Services

Financial Services - UPS Capital

Specialized Mail Services

Consulting Services

Package Delivery

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UPS Capital Overview

UPS Capital leverages the supply chain expertise of UPS to develop financial solutions that enable companies to operate more effectively.

• Founded in 1998 as a financial services subsidiary of UPS

• Staff of over 300 professionals

• Offices throughout the U.S. as well as Canada, Hong Kong, China, Taiwan

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UPS Capital Capabilities

UPS Capital exists to help businesses like yours maximize the financial resources invested in their supply chains. Our products and services support your supply chain in three key areas:

Protect Your Goods

Accelerate &Protect Payments

Improve Cash Flow

Rely on UPS Capital InsuranceAgency, Inc. to mitigate the risksinherent in today’s longer andmore complex supply chains.

Leverage the goods in yoursupply chain to attain the capitalyou need to run and growyour business.

Shorten the conversion ofgoods to cash, while protectingyour business from customercredit defaults.

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Accelerate & Protect Payments

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Accelerate & Protect Payments

UPS Capital offers a range of solutions that improve cash flow and offer fraud protection to e-commerce merchants

•Merchant Services

•Credit Card Fraud Protection

•Alternative Payments

•C.O.D. Enhancement Services

•Receivables Management Solutions

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Merchant ServicesAccelerate & Protect Payments

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Merchant ServicesAccelerate & Protect Payments

Provides credit card payment processing services including processing for traditional credit cards, stored value (gift) cards.

Plus, access e-commerce capabilities that make it easy to build and maintain a thriving online presence:

Orbital® Payment Gateway – Process your transactions in a secure internet-based environment, without the need for specialized systems.

Instant Storefront™ – Create your own online store with an all-inclusive e-commerce solution and integrated processing through the Orbital Payment Gateway.

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Merchant ServicesBenefits

No Monthly Minimums or Annual Fees

Expand Payment Options

• Your customers will appreciate expanded payment offerings including MasterCard®, Visa®, American Express®, Discover®, Diners Club® and JCB® cards. Plus, you can build repeat business and loyalty using our stored value card and gift card programs.

Get Started Quickly

• With a wide range of options for systems platforms, interfaces, terminals and communication methods, we can deploy our services with little or no disruption to your business and with fast merchant account set-up.

Improve Your Operations

• Our comprehensive reporting, expert chargeback and retrieval resolution, and 24/7 terminal support provide the insight and information you need to keep your business running smoothly.

• Funds are securely and reliably transferred directly into your designated bank account.

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Credit Card Fraud ProtectionAccelerate & Protect Payments

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• UPS Capital has teamed up with CardinalCommerce®, a leader in delivering payer authentication services, to offer fraud protection services for your e-commerce credit card transactions.

• Verified by Visa® and MasterCard® SecureCode™ programs, quickly and easily enabled through CardinalCommerce’s technology, offer merchants the highest level of fraud protection available in the eCommerce marketplace today.

All services in connection with the UPS Capital Credit Card Fraud Protection program are provided by CardinalCommerce and all fees charged for services are determined by CardinalCommerce. All decisions regarding approval will be made solely by CardinalCommerce under CardinalCommerce’s then-current criteria.

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Credit Card Fraud Protection Services offers the following benefits to merchants:

Grow globally. With our authentication services, you can process cards from all over the world without the worry of fraud, giving you almost unlimited possibilities for growth.

Reduce interchange rates. Fraud protection services help credit card providers, too. Just like safe driver discounts from car insurance companies, payer authentication can help reduce interchange rates, often by as much as 20 basis points.

Eliminate fraud risk. Verified by Visa® and MasterCard® SecureCodeTM programs save money by eliminating fraudulent online activity and chargebacks.

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Alternative PaymentsAccelerate & Protect Payments

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Alternative PaymentsAccelerate & Protect Payments

• Accept alternative payment options including: PayPal™, Bill Me Later®, eBillme™, Google Checkout, Amazon Payments™, Green Dot®, MoneyPak®, ClickandBuy®, Ukash™, and others.

• Adding these payment options will help to expand your market by allowing customers more choices, which can lead to more purchases and fewer abandoned shopping carts.

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Accelerate & Protect PaymentsCase Study

Retailer Grows Business, Expands Internationally with UPS Capital

• A U.S.-based jewelry retailer with approximately $5 million in annual sales, was selling internationally, but they were experiencing heavy losses in volume and sales due to fraud issues on international credit card transactions.

• When the company switched to Credit Card Fraud Protection and Merchant Services, offered through UPS Capital, its global expansion strategy became a success.

• With the ability to accept up to 30 percent more transactions, the company projected sales growth of $1 million per year. In addition, its overall interchange rate decreased by 10 basis points, contributing to significant annual savings for the company.

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C.O.D. Enhancement ServicesAccelerate & Protect Payments

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C.O.D. Enhancement ServicesAccelerate & Protect Payments

C.O.D. Enhancement Services* accelerate your payments with a choice of options that can help your bottom line.

C.O.D. Automatic℠

• Receive C.O.D. payments within 3 business days of package delivery.

• Funds are electronically deposited into your bank account

C.O.D. Secure®

• All the benefits of C.O.D. Automatic.

• Coverage for returned (NSF) C.O.D. checks.

* C.O.D. Enhancement Services products are offered through UPS Capital Trade Protection Services, Inc. UPS Capital Corporation and its affiliates reserve the right to change or cancel the C.O.D. Enhancement Services program at any time. The C.O.D. Enhancement Services program is governed by the terms and conditions of the contract and certain limitations and exclusions apply. This document does not in any way alter, supplement, or amend the provisions of the applicable contract and is intended only as a brief summary of the program. The UPS C.O.D. charge as set forth in the UPS rates in effect at the time of shipping apply to each UPS C.O.D. package shipped. C.O.D. Enhancement Services products may not be available in all jurisdictions. C.O.D. Secure is a registered trademark of, and C.O.D. Automatic and C.O.D. Direct are service marks of, United Parcel Service of America, Inc.

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C.O.D. Enhancement ServicesAdditional Features

Online Reporting

• Statements

• Check images

• Download of Remittance Data

Email/Fax Statements

• Daily Remittance Statements

• Activity Summary

Monthly Loss Reports (C.O.D. Secure®)

Real Time Fraud Prevention Reports (C.O.D. Secure®)

• Multiple Returned Items Report

Collection Agency Services (C.O.D. Secure®)

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C.O.D. Enhancement ServicesExisting UPS C.O.D. Process

UPS picks up checks and delivers package

Checks delivered to UPS central processing center

Checks mailed to shipper

Checks received and processed by shipper’s accountingdepartment for deposit

Shipper’s bank begins the check clearing process

Funds available to shipper

Day 1Day 1

Day 2-3Day 2-3

Day 16Day 16

Day 4-8Day 4-8

Day 9-10Day 9-10

Day 11-16Day 11-16

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C.O.D. Enhancement ServicesUPS Capital C.O.D. Enhancements Process

UPS delivers package and collects C.O.D. funds.

C.O.D. funds delivered to central processing center and deposit prepared for UPS Capital’s bank account.

Funds transferred to the shipper’s bank account via Automated Clearing House (ACH). Funds available same or next business day.

Day 1Day 1

Day 3-4Day 3-4

Day 2Day 2

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Receivables Management SolutionsAccelerate & Protect Payments

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UPS Capital can help free you from collections hassles and buyer credit risk:

• Trade Credit Insurance1

• Non-Funded Collection Factoring

• Receivables Financing – Factoring2

• Credit Intelligence2

• Credit Put Options2

• Collections Services2

1 Credit Insurance is offered through licensed insurance producers affiliated with UPS Capital Insurance Agency, Inc., and other affiliated insurance agencies. UPS Capital Insurance Agency, Inc., and its licensed affiliates are wholly owned subsidiaries of UPS Capital Corporation. UPS Capital Insurance Agency, Inc., and its licensed affiliates reserve the right to change or cancel the program at any time. The Credit Insurance program is governed by the terms, conditions, limitations and exclusions set forth in the applicable Credit Insurance policy. This advertisement does not in any way alter, supplement, or amend the terms, conditions, limitations or exclusions of the applicable Credit Insurance policy and is intended only as a brief summary of the program. Please consult the policy for the exact terms and conditions. No warranty, guarantee, or representation, either express or implied, is made as to the correctness or sufficiency of any information contained herein. Credit Insurance coverage may not be available in all jurisdictions. Credit Insurance is underwritten by a national insurance company.

2 Services for these products are provided by third-party vendors, with which UPS Capital Corporation has business relationships.

Receivables Management SolutionsAccelerate & Protect Payments

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Receivables Management SolutionsBenefits

•Expand international and domestic sales while effectively managing credit risk.

•Protect against bad-debt losses caused by insolvency or bankruptcy of your buyers.

•Obtain credit protection for all of your buyers or for only a selected few.

•Convert your qualified receivables into cash, instead of waiting for payment.

•Make better credit decisions based on proprietary information.

•Outsource your collection function for all or for more difficult collections.

•Structure a flexible solution that meets your business needs.

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Trade Credit InsuranceAccelerate & Protect Payments

• Preserves and expands both domestic and international sales while minimizing credit risk through the protection of a business’s accounts receivable

• Provides you with business intelligence needed to help expand sales, minimize risk, avoid unexpected bad-debt loss and get paid for what you sell.

• Each credit insurance policy is structured to fit your particular business situation.

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Trade Credit InsuranceBenefits• Increase sales safely by providing credit

information on potential customers

• Better borrowing position with secured receivables

• Strengthens the balance sheet and protects profitability

• Collection services

• Protection for the entire portfolio or top buyer(s) from unforeseen or unpredictable bad debt loss

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Non-Funded Collection FactoringAccelerate & Protect Payments

• Provides flexible credit coverage and professional collections of domestic and

international receivables

• Provides flexibility to cover a selected portion of a receivables portfolio

• Can provide coverage for very large debtors

• Provides the ability to increase sales safely

• Better borrowing position with insured receivables

• Reduces cost of underwriting buyers

• Flexible terms

• No large up-front deductible

• Pay as you go service fees

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Receivables FinancingAccelerate & Protect Payments

• Converts accounts receivable into immediate cash.

• Protects against non-payment of your customer.

• Provides greater flexibility than traditional bank lines.

• Improves your collection efficiency.

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Credit IntelligenceAccelerate & Protect Payments

• Provides key credit information on buyers while helping you to grow your

business with informed credit decisions.

• Gain access to multiple information sources with a broad reach of

international data.

• Online system with around the clock access to credit information.

• Monitor the credit condition of key buyers.

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Credit Put OptionsAccelerate & Protect Payments

• Offers 100% non-cancelable protection.

• Eliminates coinsurance and deductibles.

• Protection of single debtor(s) or buyer(s).

• Covers distressed debtor(s) or buyer(s).

• Flexible terms from 6 months to 3 years.

• Documentation is straightforward.

• Strong counterparties.

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Collections ServicesAccelerate & Protect Payments

• Capability to provide global assistance for collection and litigation.

• Specialized and experienced professional collection staff.

• Improve the efficiency of your collection efforts.

• Customized programs to meet your business needs.

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Receivables Management SolutionsCase Study

Client Overview

• A US-based manufacturer / distributor of stainless steel bottles had experienced significant growth over the past three years. The manufacturer / distributor had plans to expand to overseas markets, including Asia, and was pursuing additional sales channels such as trade shows.

• The company typically offered customers open account terms of net 30 days but had recently experience bad debt losses of $20,000. They were also concerned about concentration - their largest 20 of 2,000 customers represented half of their total sales.

Solution

• A Trade Credit Insurance policy was put into place to help protect the company against additional bad debt losses from concentration and from their expansion into foreign markets.

• The company was also able to begin extending credit terms beyond 30 days to become more competitive in the marketplace.

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Protect Your Goods

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Protect Your Goods

As you seek to enter new markets, expand into new lines of business, or trade internationally, your business is exposed to risk.

UPS Capital Insurance Agency, Inc.*, offers solutions to protect your business against the associated risks of trade.

•Cargo Insurance

•Flexible Parcel Insurance

* Insurance is offered through licensed insurance producers affiliated with UPS Capital Insurance Agency, Inc., and other affiliated insurance agencies. UPS Capital Insurance Agency, Inc. and its licensed affiliates are wholly owned subsidiaries of UPS Capital Corporation. UPS Capital Insurance Agency, Inc. and its licensed affiliates reserve the right to change or cancel the program at any time. The insurance program is governed by the terms, conditions, limitations and exclusions set forth in the applicable insurance policy. This document does not in any way alter, supplement, or amend the terms, conditions, limitations or exclusions of the applicable insurance policy and is intended only as a brief summary of the program. Please consult the policy for the exact terms and conditions. No warranty, guarantee, or representation, either express or implied, is made as to the correctness or sufficiency of any information contained herein. Insurance coverage may not be available in all jurisdictions. Insurance is underwritten by a national insurance company.

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Cargo Insurance*Protect Your Goods

• Protects shipments against loss or damage from the time they leave your facility until the client receives them, regardless of mode of transportation or carrier

• Customizable programs that can cover shipping risk, warehouse risk and contingency coverage to protect the buyer and seller, or choose CargoEdgeSM, our most comprehensive policy

• Insure a single shipment or all shipments (comprehensive coverage)

• Simple claims process that delivers efficient resolution and settlement

• May also protect against concealed damage, expediting expenses, general average losses, labels and brand issues

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CargoEdge℠*

Protect Your Goods

• Our most comprehensive and far-reaching cargo insurance policy

• Ensures that your goods are covered in the majority of situations, under one simplified policy

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Cargo Insurance*Benefits

• Worldwide, multimodal (land, ocean or air) coverage available on any transportation carrier

• Customized programs that cover shipping risk, warehouse risk and contingency coverage to protect your financial interest in the goods

• Fast claims resolution with most claims processed within 12 days — many insurers ask for 30 days

• Choose CargoEdgeSM, our most far-reaching coverage in one simple policy

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Cargo Insurance*Case Study

Client Overview

• A US-based distributor of heavy-duty winter clothing imported goods from the Far East / Asia and Africa.

Challenge

• The company was using their general business-owner’s insurance policy (BOP) to insure shipments. However, the cost for BOP insurance was excessive and the coverage for the company’s shipments was not comprehensive.

Solution

• UPS Capital Insurance Agency, Inc., was able to position a comprehensive Cargo Insurance policy to save money for the company while expanding coverage for their shipments.

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Flexible Parcel InsuranceProtect Your Goods

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Flexible Parcel Insurance*Protect Your Goods

• Flexible Parcel Insurance goes above and beyond the standard protection offered by UPS and is designed to protect time-sensitive goods and other hard-to-value items in the event of loss, damage or delay.

• Three types of Flexible Parcel Insurance are available:

– Basic: Covers loss or damage to goods in transit up to selling price.

– Expanded: Covers consequential losses as a result of delayed shipments. Also covers items that are excluded from Declared Value (e.g., the face value of phone cards).

– Time in Transit: Covers delays in transit for time-sensitive or perishable goods.

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Flexible Parcel Insurance*Benefits• Protects against damage to high-value,

perishable, or time-sensitive items

• Protects items that are ineligible for standard carrier liability programs

• Protects against costly consequences related to your shipments, such as reconstructing documents or interest on a late payment

• Flexible Parcel Insurance also provides coverage up to your selling price – not just your cost

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Flexible Parcel Insurance*Case Study

Client Overview

• Leading paper maker was required to ship original “certificates of origin” prior to shipping goods.

• Certificates must arrive at destination within 5 days or company had to pay for expedited reconstruction in order to complete order.

Challenge

• Company was paying high reconstruction costs for a critical part of their transactions. They sought to mitigate their risk.

Solution

• UPS Capital provided a Flexible Parcel Insurance – “Time in Transit” policy to cover the company’s certificates.

• If the certificates did not arrive within 5 business days, the reconstruction claim would be paid, thereby reducing the customer’s exposure.

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Improve Cash Flow

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Improve Cash Flow

The financial expertise of UPS Capital combined with UPS’s proficiency in facilitating international trade makes us unique in the marketplace. We provide solutions that help finance your international trade.

UPS Capital Cargo Finance®

Equipment Buyer Credit*

Global Asset-Based Lending

Loans made in California are pursuant to a Department of Corporations California Finance Lenders License. Products may not be available in all areas and may be modified based on requirements. Check with your UPS Capital representative for local availability. Credit availability is subject to approval.

Products are offered through UPS Capital Business Credit, a subsidiary of UPS Capital Corporation. UPS Capital Corporation is neither an agent for, nor associate of, UPS Capital Business Credit for the purposes of originating, processing, underwriting or servicing government guaranteed loans (e.g., Ex-Im guaranteed loans). Products may not be available in all areas and may be modified based on requirements. Check with your UPS Capital or UPS Capital Business Credit representative for local availability. Credit availability is subject to approval.

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UPS Capital Cargo Finance®

Improve Cash Flow Provides inventory financing, on a transactional basis, to customers who are importing goods via UPS Ocean Freight and using UPS Customs Brokerage.

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UPS Capital Cargo Finance® Benefits

• Increase sales by offering better terms to your customers

• Lower your cost of goods by paying your suppliers earlier in the supply chain

• Improve relationships with suppliers

• Reduce or eliminate the need for letters of credit

• Gain efficiencies in the supply chain, reducing transit times and unexpected delays (further reducing costs)

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UPS Capital Cargo Finance® Improve Cash Flow

The financing of international in-transit inventory shipped (all modes) by UPS

How it works:1. US-based borrower purchases inventory from an international supplier 2. UPS Capital finances a portion of the value of the international in-transit inventory that is

moved by UPS (air/ocean freight or small package)3. UPS Capital will extend credit lines of $150,000 to $500,000 with up to 60 day terms

International Supplier

Bill of Lading Created

Day 1Day 1 Day 15-30Day 15-30 Day 60+Day 60+

Ocean Freight U.S. Customs Clearance

U.S. Borrower Invoices Created End Customers

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UPS Capital Cargo Finance® Case Study

Client Overview

• Wholesaler of building materials that supplies hardwood flooring and decking to big-box home improvement retailers, wholesalers and manufacturers.

Challenge

• Company was forced to pay suppliers in Brazil when shipments left port, draining valuable cash flow until the shipments arrived in the U.S. and were sold to customers.

• Needed additional cash flow to fund continued operations and growth.

Solution

• UPS and UPS Capital provided an end-to-end solution that included Ocean Freight, Customs Brokerage, UPS Small Package, Cargo Insurance, and UPS Capital Cargo Finance.

• UPS Capital’s financing of imports increased working capital, leading to increased imports and business growth.

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Global Asset-Based LendingImprove Cash Flow

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• A revolving line of credit secured by foreign warehoused inventory, international in-transit inventory, domestic inventory and receivables.

• Committed facility with a $2MM to $50MM credit limit

• Advance rates of 50% or more on inventory per appraisal

• Generally used for finished goods but can also advance on raw materials

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Global Asset-Based LendingTraditional Asset-Based Loan Structure

$2 Million Inventory in U.S.

Warehouse


Warehouse

$12 Million Accounts

Receivable


Receivable

Typical ABL Loan

Inventory (50% LTV) $1.0 million

Accounts Receivable (80% LTV) $9.6 million

Total Loan $10.6 million

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Global Asset-Based LendingGlobal Asset-Based Loan Structure (Example)


Warehouse


Warehouse


Receivable


Receivable

ABL Loan Typical ABL LoanIntegrated GABL

Loan

In Country (U.S.) Inventory (50% LTV) $1 million $1 million

In Transit Inventory (50% LTV) — $1 million

Out of Country (Non U.S.) Inventory (50% LTV) — $1 million

Accounts Receivable (80% LTV) $9.6 million $9.6 million

Total Loan $10.6 million $12.6 million

$2 Million Inventory in Asian

Warehouse

$2 Million Inventory in Asian

Warehouse

$2 Million Inventory In transit

$2 Million Inventory In transit

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Company Overview

• Wholesaler of seasonal outdoor products.

• Profitable with revenues in excess of $96 million.

• Suppliers: Located in China, Taiwan and Dominican Republic.

• Customers: Fortune 500 Retailers.

Challenge

• Client needed additional working capital to fund continued operations and growth heightened by the seasonality of the business.

• Client’s current lender was uncomfortable about increasing needs for advances on inventory in transit.

Solution

• UPS Capital increased senior debt facility from $20 million to $35 million

• Credit lines of $3 million on in-transit & $2.5 million on foreign inventory that were not available previously

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Equipment Buyer CreditImprove Cash Flow

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Inventory Buyer CreditImprove Cash Flow

Short-term Loan• Lines of credit to foreign companies purchasing raw materials, spare parts or

inventory items from the U.S.

• Loans backed by a U.S. Ex-Im Bank insurance policy (coverage is typically 90%).

• 100% of contract value can be financed for eligible products.

• Inventory loans are offered in select markets and for U.S. products only.

• Loan Amount: From $150,000 to $3 million.

• Repayment terms for each advance are generally 90 to 180 days.

• Collateral may be required for facilities exceeding $1 million.

Products are offered through UPS Capital Business Credit, a subsidiary of UPS Capital Corporation. UPS Capital Corporation is neither an agent for, nor associate of, UPS Capital Business Credit for the purposes of originating, processing, underwriting or servicing government guaranteed loans (e.g., Ex-Im guaranteed loans). Products may not be available in all areas and may be modified based on requirements. Check with your UPS Capital or UPS Capital Business Credit representative for local availability. Credit availability is subject to approval.

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Medium-term Loan• Direct U.S. dollar loans to foreign entities to finance the import of U.S. capital

equipment.

• Loans are backed by a guarantee or insurance by an Export Credit Agency (US Ex-Im Bank is the Export Credit Agency of the United States).

• Coverage is typically 100%.

• Amount eligible for financing is typically 85% of contract value.

• Local cost financing of up to 30% of the contract value may also be available.

• Co-finance arrangements between ECAs could increase amounts eligible for financing.

• Loan amounts range from $350,000 to $10 million.

• Repayment terms typically range from three (3) to seven (7) years, depending on contract amount and type of equipment.

• Terms of 10 to 18 years may be available depending on the nature of the project and type of equipment.

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Long-term Loan

• Loans in excess of $10 million (US Ex-Im Bank Coverage is typically 100%).

• Repayment terms range from 7 to 12 years, depending on the nature of project, the type of equipment, and the country classification.

• An 18 year term may be available for deals involving environmental equipment.

• Amount eligible for financing is typically 85% of the contract value.

• Local cost finance equal to 30% of the contract value may be available.

• Co-finance arrangements between ECAs could increase amounts eligible for financing.

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U.S. Exporter Working Capital LinesImprove Cash FlowU.S. Exporter Working Capital Lines

• Revolving, or transaction specific, working capital lines of credit from $250,000 to $2 million

• Help fulfill export sales orders

• Turn export-related inventory and accounts receivable into cash

• Advance rates are typically more generous than those that are generally available in the market

• Eligible exporters must be based in the U.S. and the goods must be shipped from the U.S.

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Equipment Buyer CreditBorrower Eligibility Requirements

• Borrower must have been in the same line of business for a minimum of three (3) years

• EBITDA/Debt Service (including proposed debt if more than 25% of total liabilities) is at least 1.5x for the last fiscal year

• Overall exposure should not exceed 40% of the borrower’s tangible net worth

• Borrower’s total liabilities should not exceed 1.75x tangible net worth

• Borrower must have net profits during the two most recent fiscal years

• Net operating cash flow must be positive in the last fiscal year

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Equipment Buyer CreditSuccess Story

Client Overview

• An Argentina-based hospital needed approximately $1 million in new medical equipment from a U.S.-based supplier.

Challenge

• The U.S. supplier was willing to extend terms. However, the Argentine hospital was unable to get financing in their local market.

Solution

• UPS Capital provided an end-to-end solution that included air freight and financing for the medical equipment.

• UPS Capital financed $1 million, while UPS Logistics managed the delivery of all equipment.

Thank you

UPS Capital Corporation

35 Glenlake Parkway

Atlanta, GA 30328

1-877-263-8772

www.upscapital.com

UPS Capital Insurance Agency, Inc.Nicole RobinsonBusiness Development Officer980.254.8367

UPS Capital Overview

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Transcript of UPS Capital Overview