Emission
Testing Equipment Manufacturer
Situation
Medium
sized company experiencing tremendous growth opportunities,
especially from international markets. Growth was being
internally funded and was beginning to limit their opportunities.
Operating
Facts
Annual
Sales: $20 million (50% from export sales), Average Accounts
receivable: $3 million, Gross Margin: 40%, Account Turns
Per Year: 7, Credit Function Handled By Corporate Controller.
Objective
Credit
risk was not an issue - the prospect was interested in
leveraging assets within a borrowing arrangement, freeing
up capital so they could maximize on all selling opportunities,
both domestic and international.
Solution
Implement
a domestic and export credit insurance program that eliminated
all credit risk for both the prospect and lender.
Results
Credit
insurance transformed pledged accounts receivable into
"riskless" assets for the lender, allowing
an increase in advance rates, inclusion of prior excluded
receivable's in the formula and also the ability to
borrow against export open credit invoices. In total,
both programs were projected to free up approximately
$1 million in additional capital for our client.
