About Credit Insurance

Case Studies

Client: Emission Testing Equipment Manufacturer
Topic: Borrowing Enhancement Scenario

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.