Credit Policy
 

Mission Statement:

The Credit Department is responsible for maintaining a high quality of accounts receivable while selling to all customers that represent prudent credit risks. We will provide flexible mechanisms to protect our substantial receivable investment. Iron Valley and its employees have an ethical and legal obligation to respect the privacy of our customers, and to protect and maintain the confidentiality of all information that we obtain about the customers and their owners in the course of providing services to them.

Scope:

This Policy applies to all sales of Iron Valley Supply Company products to customers. All departments within Iron Valley that are responsible for the sale, marketing, contract approval, order acceptance, scheduling and shipment of products must adhere to the policy and guidelines below.

Policy:

In order to facilitate the flow of orders and shipment of products, it is Iron Valley Policy that credit be extended to all customers who demonstrate both the ability to pay and history of timely payments of debts. If a credit limit isn’t available, we accept credit card payments or prepaid orders. Credit limits, payment terms and methods will be determined by the criteria listed below.

Organizational Responsibilities:

The credit analyst is responsible for managing the credit review and approval process and accounts receivable balance to minimize collection exposure in accordance with overall corporate operational and financial objectives. 

It is the responsibility of the credit department to authorize all communications with the customer regarding credit expectations including but not limited to: acceptance status, credit line value and payment terms and methods.

Credit Evaluation:

New Customers - Potential customers should complete the Dealer Registration option from the Iron Valley website. New dealers will be set up on a Term 7 (Next Day Payment) status. This allows the customer to place an order and then receive their invoice the next day via BillTrust and by email to pay for it.

To receive an open account, the customer must complete a credit application online (or sent through Customer Support). This credit application process allows the input and submittal of required documents to be reviewed for potential credit. The Credit Analyst will establish limits for all customers based on the following criteria:

• Trade credit references
• Bank references
• Equifax credit bureau file
• Any other credit bureaus or references utilized, as may change from time to time without notice

Existing Customers – Active customers will be reviewed every 90 days to determine if credit limits and terms should be changed. If a customer requires an increase in credit limit before the 90-day review, the customer or the account manager should contact their credit analyst. Updated financial information may be required. Payment history will be priority one when considering an increased credit limit.

Scoring Process:

All credit accounts will be evaluated based upon the following criteria:

1. Credit bureaus files (Equifax currently)
2. Industry references
3. IRS, state tax and other tax authorities
4. Non-industry references, if applicable
5. Bank references and bank statements
6. Time in business (longer is better)
7. On-time payment history with Iron Valley Supply (paying on time, all the time is best)
8. On-time payment history with other firearms distributors (paying on time, all the time is best)
9. Any additional sources as may be added from time to time in the future

Credit Limits & Stipulations:

Open accounts will be extended on 30-day terms. All open accounts receive a $10,000 minimum credit limit.

Higher credit limits will be set at 1.25x the dealer’s average monthly spend with Iron Valley for the last three months as long as the dealer remains in good standing (see definition below). New dealers with open accounts at other firearms distributors that are in good standing will have their credit limits set at 1.25x the dealer’s average monthly spend with other distributors. Credit limits will be reviewed every 90 days to administer these limits. (This credit review is expected to occur automatically in the future following deployment of credit management software).

Good standing means:

1. 0-1 late payments in last 90 days
2. Current on all amounts due
3. No adverse changes in credit bureau, other distributor accounts, IRS, state or other credit factors.

If the dealer has 2+ late payments or any amounts or fees that are past due, past-due amounts must be resolved prior to credit limit increases and dealers must pay on time for the next 90 days and acknowledge IVS terms of service to become eligible for credit increases. Dealers with 2+ late payments that do not return to good standing are subject to reduction or revocation of open account, credit limit and/or terms.

All past-due amounts are charged interest without exception per the policies outlined below.

Stipulations:

• Extended terms for promotions or any other invoice are generally not permitted until established with Iron Valley Supply for 6 months.

• Any extended terms for small and newer accounts must be approved by the credit analyst.

• Guaranty: Personal guaranty(ies) from the business owner(s) are required for smaller independent dealers operating as LLCs, S-Corporations, partnerships, or other small business categories consistent with standard UCC practice

Collections:

We strive to have a consistent and courteous approach to collection. All customers are sent an account statement or individual invoice routinely to prevent late payment. Additional statements or invoices are sent when past due. If no payments are received, the account manager is asked to contact the customer. If there is still no response, after repeated attempts to collect the credit analyst recommends the use of a Collection Agency or attorney once the account has reached 90 days past due.

All ACH returns are subject to immediate collection processes and will be charged a $30.00 return item fee. Any account that has 2 ACH returns for insufficient funds (NSF) in a year will be put on Term 16 prepay.

Past Due Policies:

All past-due invoices, handling and other charges will be charged interest at 18% per annum on the entire past-due amounts. Interest will be assessed on the first day that an invoice becomes past due in an amount of 1.5% of the entire amount past due, and an additional 1.5% interest will be assessed every subsequent 30 days thereafter.

Any Term 07 account that goes past due may be returned to Prepay Term 16 status.

Any 30-day open account that goes past due may be returned to a Term 16 prepay account. The customer may pay for a Term 16 order but must also pay toward their past-due balance. The customer may then be put back on 30 days when all amounts including late fees have been paid.

Any account that goes beyond 90 days past due will be sent to collections.

Dropships:

Any Term 16 or 07 account must PREPAY for dropships.

Any open account must get credit approval before submission of order.