Case Study – Sales Expansion Scenario

Situation

Well capitalized, established company, experiencing tremendous growth opportunities within an industry that has witnessed increased demand in addition to several consecutive raw material price increases. This caused average account exposures to double in some cases, increasing the financial risk of a potential catastrophic credit loss.

Operating Facts

Annual Sales: $120 million, Average Accounts Receivable: $15 million, Gross Margin: 10%, Account Turns Per Year: 8, Credit Function Handled By Corporate Controller.

Objective

Cover total customer portfolio, offering a better spread of risk to underwriting, allowing increased coverage on tougher risks.

Solution

Implemented a credit insurance program that provided credit risk assessment on their medium and large accounts. The policy assumes the responsibility of continuous monitoring on all covered accounts – no credit “due diligence” required by our client. The policy was customized to provide immediate credit decisions for new medium sized accounts. Also, marketing prospect lists were developed with names of accounts pre-approved under the policy.