About Credit Insurance

Case Studies

Client: Computer Products Wholesaler
Topic: Decision Support Scenario

Situation
Middle market company selling into a changing industry - specifically, how they do business. Historically, sales were conducted on C.O.D. basis, or very short terms; however, accounts have begun to demand open credit terms and our prospect has little experience managing credit risk. Also, the number of new accounts seeking credit had been growing to unmanageable levels

Operating Facts
Annual Sales: $14 million, Average Accounts Receivable: $2 million, Gross Margin: 25%, Account Turns Per Year: 7, Credit Function Handled By The Management Team.

Objective
Outsource credit analysis function to provide expert advice, allowing our prospect the ability to safely grow their business.

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.

Results
The program produced immediate results. Sales were made to new and existing accounts on open credit terms that our client would have never entertained prior to the adoption of the credit insurance program. Our client successfully grew their business by 200% during the initial policy period and is projecting to generate approximately $35 million in revenue over the next year.