Bill Weilemann Director of Credit bweilemann@packagingcorp

1. More Reasons Why Customers (the Smalland Mid-Sized are Joining the Largest) areAdopting a Terms Push Back Strategy and What Suppliers Can Do to Fight Back Presenters: Bill Weilemann Director of Credit bweilemann@packagingcorp.com Larry Lipschutz, CCE Director of Credit & Collections llipschutz@frenchgerleman.com Scott E. Blakeley, Esq seb@blakeleyllp.com

2. The Supply Chain and Trade Credit • Trade credit as driver of the economy • Less expensive than external financing • The origin of TPS: Credit crunch of 2008 • Large companies sitting on record cash holdings but increasing the days to pay suppliers • Customers stretching supplier terms to preserve cash and fill working capital gaps • Inventory purchases are biggest cash drains • Customers extending payables has become a best practice

3. The Supply Chain and Trade Credit Source: Sageworks

4. A Customer’s Request vs. Demand for Extended Terms: How Indispensable is the Customer (and the Supplier)? The Voice of the Supplier’s Credit, Sales and Management Teams.

5. The Supply Chain and Trade Credit • Customer strategy for extending supplier terms • Financially sound customer • Financially struggling customer • Re-credit score and supplier due diligence • Formal vs. ad hoc TPS • Accommodative vs. Punitive • The small to medium sized customer vs. the large customer

6. Key Terms for Large Company TPS • Cash Conversion Cycle(CCC)- Number of days to convert account receivables into cash flow. • Days Payables Outstanding(DPO)- Number of days payables outstanding relative to purchases of inventory (cost of goods sold) • Days Sales Outstanding(DSO)- Sales per day relative to average receivables • Days Inventory Outstanding(DIO)- Cost of goods sold per day relative to average inventory levels

7. The Supply Chain and Trade Credit • Added Reasons Customers are Rolling Out TPS • Benchmarking: Customer’s Competitors Forcing TPS • Customer Mergers • Supply Chain Financing Moves Downstream • The Press and the Cottage Industry of Consultants • International Influence

8. COST OF CARRYING A/R PAYEMENT TERMS AND SUPPLY CHAIN FINANCING COSTS

9. Government Response to TPS • U.S. • SupplierPay • Voluntary program aimed at larger companies – no maximum number of days to pay. Rather, these companies sign a pledge to reduce their DPO with smaller suppliers • European Union (EU) Countries • EU has adopted legislation for EU countries to have companies sign up for a supplier Prompt Pay Rule (PPR)

10. Supplier Strategy for Dealing with TPS

11. Supplier Strategy for Dealing with TPS Contract Controls

12. Supplier Strategy for Dealing with TPS

13. Exhibit A U.S. Public Companies with Industry Leading DPO’s

14. Exhibit B [Customer’s Letterhead] Dear [Vendor (your company)], This letter confirms that [Competitor] has offered us a sales arrangement for extended terms which includes: Product/Service involved:______________________________________ Terms of payment:____________________________________________ Date of offer:________________________________________________ Quantity of product/service involved:_____________________________ This information is provided to allow [Supplier] to meet the offer of [Competitor]. Sincerely, [Customer] Meet the Competition Form