Is it time to consider trade credit insurance? It may be – especially if you answer any of the following questions in the affirmative:
* Do you require capital to expand your business but feel constrained by your existing lending agreement, particularly over the extent of margining
available on your domestic and/or export accounts receivable?
* Do you worry about the financial strength of your key buyers and the impact their insolvency could have on your business?
* Do you wish to aggressively expand your customer base while limiting the risk of bad corporate debts?
If you answered “yes” to any of these, trade credit insurance is the risk management tool you need.
“Surprisingly, not many North American CEOs, CFOs or even bank account managers have heard of trade credit insurance. But it’s very well known in
Europe and many European manufacturer/exporters do have coverage,” explains Graham MacLachlan, an independent agent in global trade credit and political risk insurance.
“It’s the best-kept secret in international trade.”
That’s a fact. Nevertheless, the canniest business leaders realize that purchasing trade credit insurance is a surefire way to protect their accounts receivable in case domestic or internationally-based customers find themselves unable – or unwilling – to pay.
MacLachlan has seen it happen.
“Say you’re a successful Canadian manufacturer whose product is building an international reputation. You start getting orders from buyers all over the world,” MacLachlan cites a hypothetical example.
“You don’t know who these people are. And there is really no way of accurately checking their credit.”
But when such a manufacturer has a trade credit insurance policy in place, he’s protected in various ways.
Since his insurers deal with domestic and global credit reporting agencies, they’re able to supply information on a potential client’s credit-worthiness BEFORE the Canadian company finalizes a sales deal.
Not only that, the policy protects them beyond the point of signing off on the deal. Their shipments will be covered to the extent of a pre-agreed amount.
“You know you’re insured for that set amount,” says MacLachlan. “So you can sleep at night.”
There are further advantages, however. When protected by a trade credit insurance policy, Canadian companies looking at expanding into new markets
find themselves able to access additional capital.
How?
By asking their bankers to margin their existing lines of credit against insured accounts receivable.
“When you put a policy in place, your bankers may free up access to 90 per cent of your line of credit,” MacLachlan explains.
Best of all, the cost of such a policy is reasonable – usually less than one per cent of the customer’s total credit sales.
Which enterprises are in a position to benefit from a trade credit and political risk insurance policy? MacLachlan is dealing across all sectors, such as
agri-business, oil and gas, utility, technology, and various manufacturers and exporters. Virtually anyone seeking to expand their business stands to gain from this type of protection.
One of only a few independent insurance agents offering this particular product in Alberta, Graham MacLachlan is an international trade expert who
has worked in the field for close to 20 years.
He has been employed by international customs brokerages in both Canada and the U.S., served as a trade development officer for a provincial government and worked with the Business Development Bank of Canada and Export Development Canada.
As an independent agent who deals exclusively with half a dozen trade credit companies, MacLachlan makes this promise to his clients: He’ll find the best possible insurance deal to meet their specific requirements.
“I can provide multiple quotes that best conform to a company’s business situation and meet their financial needs,” MacLachlan says.
“It’s important that companies know their options before acquiring trade credit insurance and you can only do that by shopping the market.”
His broad range of contacts and commitment to customer service allow MacLachlan to satisfy special requests.
“Occasionally, an insurer simply doesn’t have an appetite for a
certain type of risk. But I’m generally able to find an insurer we can work with,” he says.
MacLachlan is also happy to provide political risk insurance to larger companies with overseas holdings and interests.
In addition, MacLachlan’s extensive international experience qualifies him to
advise his customers on any number of commercial issues, above and beyond insurance matters.
The best way to learn whether trade credit insurance can be of benefit to your business is to contact Graham MacLachlan directly and have him assess your current business and financial situation.
* Phone: 403.681.9703
* Fax: 403.203.9760
* E-mail: g.maclachlan@shaw.ca