Credit Policy

This policy is applicable to ALL school (studio and club) owners.

WORLD TANG SOO DO ASSOCIATION

CREDIT POLICY

April 2018

Background

The World Tang Soo Do Association (WTSDA) has, since its inception in 1982, permitted member studios to purchase merchandise, submit testing paperwork, and transact other business on a credit basis.  Studios have not been required to submit payment simultaneously with orders, which has permitted transactions to be done telephonically or electronically, with WTSDA billing the studio, and the studio remitting payment after the fact.  This policy has existed even though studio owners routinely collect payment from their students in advance, and, therefore, have no reason for the WTSDA to extend credit to them.

Over the years, some studios have built significant balances with WTSDA, resulting in WTSDA carrying accounts receivables in excess of prudent credit practices.  Since there have been no formal guidelines for providing credit to member studios, there has been nothing to guide management of WTSDA on whether to continue to issue credit or not.  This policy is designed to provide guidance to WTSDA on issuing credit, and to inform member studios of credit limits.

Policy

Beginning on April 1, 2018, a credit limit of $2500 per registered studio or club (hereinafter referred to as studio), which is otherwise in good standing with WTSDA, will be implemented.  There will be a limit for any one owner of multiple studios/clubs of $5000 maximum outstanding credit for all studios/clubs owned by that one owner.  Any studio may incur a balance up to the credit limit, but, once the limit is reached, any further transactions will have to be paid in cash until the credit outstanding drops below the $2500/studio limit.  Further, any amount outstanding beyond 60 days from being invoiced by WTSDA must be paid in full (regardless of whether or not the credit limit has been reached) prior to any new credit being issued.  In effect, this policy grants member studios a credit limit of $2500 that may not exceed 60 days outstanding.  Amounts outstanding beyond 60 days will be subject to a monthly finance charge of 1% per month, or partial month, for which such balances remain unpaid.

Transition

WTSDA recognizes that on the date on which this policy is officially implemented, there will be a number of studios with balances either over the new credit limit, or with balances beyond 60 days.  The following transition rules are intended to aid studios in their compliance with the new policy:

  • Any balance outstanding on the date of implementation that is over 60 days must be paid within the first 60 days of the new policy’s effective date to avoid any finance charges.  Any original balances over 60 days then still outstanding will be subject to the new finance charge rules.
  • Any studio balance over the credit limit will have 90 days to bring the balance down to the new credit limit.  During that time, all new transactions must be paid in cash when submitted.  Any studio with an outstanding balance that cannot reasonably be paid within the 90 day time period may ask the WTSDA President and Treasurer for a longer payment schedule, but, in no event will the payment schedule exceed one year, unless the Executive Committee approves such payment schedule. 
  • If the balance outstanding after 90 days continues to exceed the credit limit, then all current transactions must be paid in cash, plus 10% of the amount by which outstanding credit exceeds the credit limit until the amount of credit outstanding does not exceed the credit limit.
  • Any amount of credit outstanding that is under 60 days, but ages over 60 days during the transition, must either be paid when it ages to 60 days, or be subject to the new finance charge rule.

The above policy is in recognition of several factors:

  • WTSDA provides a service to the member studios for which it deserves to be paid currently.
  • WTSDA is not a bank.
  • Some member studios have taken extreme advantage of the lack of a policy, and have carried significant balances that have aged out over 120 days.  This practice is not equitable to other member studios which have paid their expenses on a timely basis.
  • Studio owners have collected funds from their students for the expenses submitted to WTSDA. Failure to remit the funds to WTSDA amounts to defrauding both students and the WTSDA of the benefits of a bargained transaction.
  • The requirements for studio certification in the Black Belt Manual state as follows: “Each studio must clear all dues and fees to the WTSDA in an appropriate time period (30 days)”.  This policy is slightly more liberal (60 days).  Failure to adhere to the policy risks the studio losing certification.

Default Provisions

Any studio owner who defaults under the credit policy will be subject to the following sanctions:

  • The defaulting studio owner will be placed on suspension from membership in WTSDA.  During the period of suspension, the studio owner will not be permitted to attend any sanctioned WTSDA event.  The period of suspension will not be credited to time required to advance to next rank.  The suspension will end when the studio owner becomes current according to this policy.
  • While a default exists, no orders or transactions will be processed by WTSDA unless accompanied by a cashier’s check for the amount of the transaction plus 10% of the amount by which the studio’s outstanding balance exceeds the credit limits of this policy.  The purpose of allowing for transactions to be processed while the studio owner is on suspension is so that the studio’s students, who are innocent of any default committed by the studio owner, are not denied the opportunity to continue their advancement. 
  • The Executive Committee may decertify the studio if failure to takes steps to cure the default are not taken.