Whether the client is looking to increase sales to existing buyers by granting longer terms of sale; venturing into new markets; taking steps to protect their balance sheet against credit concentrations; or, financing an increasing Days Sales Outstanding (DSO), we have a solution for you.
Generally, one or more of the following points are factors that influence our clients to purchase insurance products from our credit risk experts:
Yes, the world is flat...to some extent. In the past 10 - 15 years, buyers have become smarter than ever before. In the midst of it all, they have found ways to use the balance sheets of their suppliers to achieve longer, more extended financing terms on their purchases.
Many suppliers have accommodated these requests and have granted longer terms of sale as a means of retaining business, or in some instances, increasing sales volumes. These types of supply chain financings have grown popular and are important topics of discussion between many large manufacturers and their suppliers. Suffice it to say that, depending upon your perspective, extending longer terms of purchase or sale, is both a winning proposition and a game changer. However, many manufacturers and trading companies have determined that a trade credit or political risk insurance product will establish the confidence required by the seller to “meet the market” in order to sustain existing relationships, increase sales or venture into new markets
Full Service Brokerage and Advisory
An expert leading broker of trade credit insurance, protecting policyholders from large unexpected accounts receivable losses. As a specialized intermediary, we tailor our programs to meet your specific objectives using all of the world's major underwriters in the credit insurance and capital markets. Our clients include multinational and mid-market companies in a wide range of industries.
We make it easy for you. Our experts guide you through the entire process, obtaining competitive proposals, negotiating, reviewing, and advising on the agreements. After your protection is in place, we help you administer and comply with the credit insurance policy's terms and conditions.
Credit Insurance Policy Types
- Whole Turnover or Multi Buyer Coverage - insuring all or most of your revenues
- Key Account Coverage - insuring only your largest credit exposures or best sales expansion opportunities
- Single Buyer or Distressed Account Coverage
Benefits of Credit Insurance
- Provides protection against unexpected revenue, profit and cash shortfalls caused by bad debts or the insolvency of major customers or suppliers.
- Enables you to sell more to domestic or foreign customers (export credit insurance) with whom you might have been too conservative in the past. You might now be able to enter new geographic markets or offer higher credit limits or longer terms of sale.
- Your lender may be able to increase your borrowing availability due to the extra layer of protection afforded by the mitigation of a large customer concentration, foreign receivables, invoice age or extended sales terms.
- Can be used an additional source of credit information, particularly on foreign customers.
Self-Funding - We can demonstrate for you how these credit insurance programs can often be self-funding, while increasing revenues and protecting your profits.
Credit Support Services
We are dedicated policy advisor will assist you with any questions or reporting, and coordinate claims processing. We also offer a bolt-on, cloud-based credit support services systems. These systems provides credit policy, credit and collection controls, with management workflow to streamline your entire credit process and assure you remain in compliance with the credit insurance contract..
Integrated Collections - One stop convenience
Credit insurance policies require that past due accounts be handled promptly so as a valuable service to our insured clients, your service advisor will provide integrated collection services and online reporting anywhere in the accounts receivable life-cycle, for ongoing or delinquent receivables, with special discounted rates from our industry partners. This will save you the hassle of dealing with multiple parties, controls, follow-ups and reporting. Plus, you can count on getting excellent collection results.
As you know, credit risk is payment risk related to the buyer itself. This encompasses non-payment by your buyers potentially due to:
- Insolvency issues
- Protracted default (non-payment within 6 months after the due date)
- Pre-shipment risk (which is risk related to losses caused by a buyer's insolvency during the manufacturing or contract period (i.e. before delivery of goods or completion of contract)
Longer terms of sale, mergers and acquisitions, changing political landscapes within important international regions, and uncertain economic times in the U.S. are all cause to pause. At Arthur J. Gallagher & Co., our Trade Credit & Political Risk Division can customize insurance solutions to assist you in transforming political and /or commercial obstacles into manageable risks. Read our full Trade Credit website to gain a comprehensive understanding of the options available to you to share credit or political risk exposures within your niche industry.
Accounts Receivable Puts: Non-Cancellable Credit Insurance
We work with major financial institutions to provide specialized non-cancellable coverage to cover single account, major risks that cannot be adequately covered by traditional credit insurers or factors.
If one of your largest customers or key suppliers defaulted, it might represent an enterprise risk for your company.
Accounts Receivable Puts provide non-cancellable credit protection to cover your large credit risks with either public or privately held customers or suppliers, even if that customer is in financial distress. This type of credit risk protection is available to companies of all sizes and industries.
The Accounts Receivable Put Structure. You pay a fee that gives you the option of selling your accounts receivable to a counterparty, often a major money center bank, at a pre-established price within an agreed timeframe (typically 6-60 months), if a pre-defined event occurs, such as customer bankruptcy. This credit protection can be tailored to your requirements with the following features:
- Written to cover a single customer (obligor), even on customers who are distressed or operating in Chapter 11.
- Term from 6-60 months.
- Protects up to 100% of the receivable amount; usually with no deductibles.
- Amounts from $500,000 up to $100,000,000.
- Non-cancellable coverage, (nor can the coverage even be reduced in the event of a credit quality deterioration)
- Your customer is not notified that you have acquired protection.
- Accounts Receivable Puts are generally treated under GAAP as insurance and as such can be off-balance sheet and expensed.
- Accounts Receivable Puts can be used to cover supply-side Mark-to-Market Exposure. This means that the coverage can be structured to protect you in the event that your supplier's insolvency causes you to incur unbudgeted financial exposure.
- Accounts Receivable Puts are available primarily for companies with publicly traded debt. Call us to see if your customer or supplier is a candidate.
Our experts will guide you through every step of acquiring this non-cancellable form of business credit protection.
For an immediate quote or more information, please contact our Managing Director directly.
Political risks can be driven by one’s perception of uncertainty and/or change in the economic and political environments within foreign countries where you conduct business. Our Gallagher experts can help customize a program that assists you in addressing potential perils such as:
- Currency inconvertibility and non-transfer risk
- Confiscation, Expropriation, Nationalization and Deprivation (CEND) that protect corporations and financial institutions who maintain an ownership position in property abroad
- Political violence and forced abandonment
- War or civil unrest
- Political violence
- Embargoes and sanctions
- Export license cancellation
- Contract frustration
We all know that increased sales are critical to most every organization, but it also increases your Days of Sales Outstanding (DSO), changes the risk profile of your clients and stretches your working capital requirements to new levels.
Supply chain financings are of growing significance, but how much capacity and support can you expect from the financial institutions with which you do business? Generally, an insured receivable is more easily financed. A customized receivable insurance solution can also cause the lenders to increase credit capacity on specific names as a means of making supply chain financings more efficient and robust. Arthur J. Gallagher & Co's Trade Credit & Political Risk team can introduce creative insurance solutions to you from well-rated insurers which can assist in increasing or enhancing financing opportunities for your company.