Company
Steel
Scrap Processor servicing Manufactures and Brokers.
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
Prospect
had a few large accounts that offered additional selling
opportunities but had reached their "comfort"
exposure level. They were interested in a credit risk
protection program that would allow them the ability to
safely increase sales with reduced risk.
Solution
Cover
total customer portfolio, offering a better spread of
risk to underwriting, allowing increased coverage on tougher
risks.
Results
Coverage
approved on just one account generated additional gross
profit that covered the total cost of the protection program
- actually projected to return over 200% of the programs
total annual cost!
