Preference Analysis Methodology
Determine a historical baseline based on the weighted
average invoice to payment date (or by days past due) for the
following potential "baselines":
The two year payment history.
2. The two year history, excluding the 90 days before the start
of the preference period.
3. The one year
weighted average for each time slice is computed based on (i) all
invoices and (ii) after excluding the outliers (top/bottom 10 %).
This process generates six different weighted averages.
Calculate the weighted averages under both methods for the
Compare the weighted average results for the two time periods, and
choose the timeline and weighted average method that creates
the biggest variation between the preference and historical period.
Determine an acceptable swing of days +/- of the historical weighted
average to create an OCB From and OCB To range of days. Preferential
transfers that fall within this range would be treated as within the
ordinary course of business (unless the transaction was already
eliminated by new value).
two analysis': One where new value is calculated first and the OCB
range is applied to the remaining at issue transactions. The result
is the Net Preference Claim. Next, run an analysis where the
ordinary course of business is applied first, and new value is
applied to the remaining at issue transactions. Choose the
analysis method that results in the largest Net Preference Claim.
Generate the following reports:
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