FORM 20-F Grupo Casa Saba, S.A.B. de C.V.

Table of Contents
Payments and Collections
Most of our distribution sales are made on credit, with customers signing promissory notes for each invoice indicating the delivery of a product. Cash-on-delivery
terms are mainly used with new clients or those whose credit has been temporarily suspended. We negotiate the number of days of credit that we will extend to our clients on a caseby-case
basis. The determination of the number of days that we will extend credit to a particular client depends on a number of factors, including the client’s creditworthiness, as well as
the length and nature of the client’s relationship with us. The determination of the number of days that we will extend credit to a particular client also depends on our current business
strategy. For example, in connection with our efforts to increase sales to particular sectors of the market, in some cases we extend credit to clients in these sectors on more favorable
terms than those offered to our overall client base and, as a result, the maturity of accounts receivable due from clients in these sectors increases slightly. We are constantly adapting
our collection methods to market and general economic conditions. The average maturity of accounts receivable due from our overall client base was 63 days in 2009, 73 days in 2010
and 51 days in 2011.
Although we are continuously seeking to reduce the average maturity of our accounts receivable and maintain an aggressive collection policy for delinquent
accounts receivable in conjunction with our efforts to improve our financial results and the efficiency of our operations, we could, in the future, decide to extend credit to clients in
particular sectors on more favorable terms than those offered to our overall client base.
The following chart sets forth the average contracted maturity of accounts receivable due from various types of clients.
Credit
Days
terms
Pharmacies 50
Supermarkets and local wholesalers 60
Government 100
Publications to wholesalers 60
Publications to retailers (1) 60
(1) National retail chains are centralized
Purchasing
We order all of our products for the distribution business on an ongoing basis, negotiating quantity and price periodically, rather than committing to contractual
terms. While the majority of our suppliers are Mexican companies, we do purchase some products from international manufacturers. We negotiate exchange risks by purchasing these
products in Pesos or setting a limit on our exchange risk exposure.
In previous years, each of our distribution centers placed its own orders on a weekly basis, directly to suppliers. These orders were placed through our computerized
order system, Electronic Document Interchange, or EDI, which we have implemented to communicate efficiently with clients and suppliers through a platform supporting different
electronic communication protocols. Suppliers delivered orders directly to the distribution warehouse that placed the order, or to our transportation subsidiary, Marproa. Suppliers
typically delivered bulk orders directly to the distribution warehouse that placed the order. In the second half of 2000, we centralized our purchasing to improve our financial results and
increase the efficiency of our operations. As a result, all of our orders for all of our distribution centers are placed through our centralized system. Deliveries of non-Mexican products
are handled by Mexican customs near the U.S. border or the port town of Manzanillo, and are typically made directly from the supplier to a Mexican customs agent. Once the customs
agent completes the importation procedure, the products are then sent to our distribution center via ground transportation.
Marproa is a common carrier that also provides freight services to third parties at market rates. From Marproa, we make deliveries several times a week to each of our
distribution centers.
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