Accounts Receivable Management Solutions

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1 Accounts Receivable Management Solutions from Accounts Receivable Management Solutions from

2 Is one of your largest assets unprotected? There is a greater chance that a business will experience a loss within its accounts receivable than any other asset. Land & Buildings Machinery & Equipment Inventories Insured Assets Uninsured Assets Senior Executives Accounts Receivable The only major asset left uninsured Cash On average, 40% of a company s assets are in the form of trade debts. Sometimes the figure is far higher. Accounts receivable are a critical component of your balance sheet they directly affect your cash flow and profitability. Yet while you insure your company against property loss, liability and other unpredictable, high-exposure events, you re leaving one of your most valuable assets open to loss. There is a safer way to do business. A credit insurance policy with delivers the peace of mind that you will get paid for what you sell. This assurance empowers you to sell more, with confidence. What is Trade Credit Insurance? Trade credit insurance, also called accounts receivable insurance, is a financial tool that manages both commercial and political risks that are beyond a company s control. It is protection against your customer s failure to pay its trade debts. This can arise because your customer becomes insolvent or because your customer fails to pay within the agreed upon timeframe. Who should use Trade Credit Insurance? Any company selling on open account terms to other companies can benefit from credit insurance. policyholders can be found in all industries and are companies of all sizes. Firms in most sectors of the economy, including business services and those selling actual goods, use credit insurance to help their business grow and succeed.

3 Key Facts Incorporated in 1893, is the world s leading provider of trade credit insurance solutions. We offer both domestic and export credit insurance policies that protect clients against commercial and political risk in more than 200 countries worldwide. We also provide services to help companies outsource their debt collection, risk management and credit management information needs. is the North American subsidiary of the Group. Through its team of market-leading subsidiaries, local presence spans more than 50 countries and six continents. Our Affiliation with Allianz SA, the holding company of Group, is a listed company on in NYSE Euronext Paris and it is 68% owned by Allianz, the global leader in property and casualty insurance. The Allianz Group is a global financial services provider. Approximately 78 million retail and corporate clients in more than 70 countries rely on Allianz s knowledge, global presence, financial strength and solidity. Financial Ratings North America Insurance Company is rated AA- by Standard & Poor s. An insurer who is rated AA- has VERY STRONG financial security characteristics. We maintain a financial strength rating of A+ and an issuer of credit rating of AA- from A.M. Best Co., indicating strong risk-adjusted capitalization and risk management practices. The Group maintains the [highest] AAA rated reinsurance companies due to its strong historical and economic track records. To schedule a meeting with a representative, please call or visit us at for a free, no-obligation quote.

4 How does credit insurance work? A credit insurance policy is more than just a piece of paper, it is a partnership. As a virtual extension of your company, provides the knowledge and resources you need to manage, maximize and protect your receivables. When you initiate a policy, we analyze the creditworthiness and financial stability of your customers and assign them a specific credit limit, which is the amount we will indemnify if that insured customer fails to pay. At any time during the policy s life, you may request additional coverage for trade with any of your customers if the need arises. While we continuously monitor each of your insured customers, we will evaluate the risk of increasing the coverage and will either approve the additional credit limit request or decline it with a clear and timely explanation. You can also request a credit limit for a new customer with whom you would like to start doing business. We receive over 20,000 credit limit requests every day and process 85% of them in less than 48 hours. It is our responsibility to proactively monitor the creditworthiness of your customers. We do this by gathering information about your customers from a variety of sources, including credit reporting agencies, visits to the customer, public records, information supplied by other policyholders that sell to the same customer, receipt of financial statements, and past-due reports. This information is constantly updated and cross-referenced. If our information indicates one of your customers is experiencing financial difficulty, we will notify you about this, which helps you establish an action plan to mitigate and avoid loss. While credit insurance indemnifies losses incurred from non-payment of commercial debt, the ultimate goal is to help your business avoid foreseeable losses. If a loss does occur with an insured customer, we will indemnify the loss up to the buyer s credit limit. Cost Justification The extra sales revenue you ll earn by increasing limits can offset the cost of a policy many times over. To the right is a sample return on investment with a trade credit insurance policy in place. This policy more than pays for itself by enabling sales to just one additional customer. Sample return on investment with a trade credit insurance policy

5 Benefits of trade credit insurance A trade credit insurance policy is an investment one that can offer attractive returns through the value of its benefits, even if you never make a claim. credit insurance example: Catastrophic Loss Prevention Credit Insurance protects a company from catastrophic bad debt losses one of the top reasons for business failure. A large loss can lead to cash flow disruption, and the lost profit is difficult to recover. A trade credit insurance policy compensates you in the event of non-payment. Sales Expansion By minimizing risk, trade credit insurance enables you to sell more, confidently. With the assurance that you will be paid for what you sell, your credit staff can often approve higher limits to your existing customers and safely extend credit to new and unknown accounts. You can also make more strategic decisions when considering expanding sales into new markets. Competitive Advantages in Exporting Credit insurance provides a platform to grow your business internationally. Level the global playing field and win more business by offering safe open terms overseas. Better Borrowing Options Banks typically limit what you can borrow based on the perceived risk of international receivables, concentration of sales to large customers, or age of certain accounts. When your domestic and international receivables are covered by a credit insurance policy, you may be able to borrow more often at more favorable rates. Reduce Bad Debt Reserves Trade credit insurance places a ceiling on bad debt losses, allowing you to release a significant portion of your bad debt reserves a move that can have an immediate, positive impact on earnings. And you ll be replacing non-deductible bad debt reserves with a credit insurance premium that is a fully tax deductible business expense. Average A/R Balance Total Yearly Sales (Revenues) on Credit Gross Profit Margin from Sales Total Number of Credit Customers Turns (No. of times you sell to a customer in a year) Estimated Premium Average Credit Limit Size of A/R per Customer $5,000,000 $30,000,000 10% 50 6 $45,000 $100,000 Based on the Gross Profit Margin, this is the amount of additional Revenue you need to offset the cost of the policy Based on the average A/R per customer, this is the number of new shipments you need to offset the policy Based on the number of Turns, this is the total number of new customers you need to add to offset the policy $450k

6 credit insurance solutions At, we provide tailored solutions to meet the business needs of companies of all sizes and across all industry sectors. Our underwriters are industry specialists who will work closely with you to deliver in-depth credit analysis and ongoing account monitoring to provide early warning of potential credit risks before they become a loss. With thousands of policyholders from small businesses to large multinationals, we can show you how our solutions deliver the value that matters to your company. Small Companies Credit insurance can be essential to ensuring a small business continued success. It can provide powerful information and support that your business might not have otherwise. Medium and Large Companies Whether you want to expand your business in domestic or international markets or protect one of your largest assets, we can help you succeed with our customized credit insurance solutions. World Agency for Multinationals As a multinational, you have operations around the world and need a worldwide solution. At World Agency, we have the knowledge and specialists to support your business strategy and are specifically tasked with servicing multinational clients with a turnover in excess of $600 million and with business units located in two or more countries.

7 Why choose? A partnership with is more than just a credit insurance policy. We deliver a multi-purpose strategic tool designed to meet the changing needs of your business. Knowledge to steer your business. Through our worldwide research team, you gain access to actionable economic intelligence, strategic forecasting, and marketspecific risk analysis. Armed with this knowledge, you can confidently extend more credit to your customers and expand sales to new prospects. Financial peace of mind. Our comprehensive risk monitoring process provides advance warning of potential threats, helping you avoid loss before it occurs. As added protection, if a default does arise we pay when your customer does not. Global reach, local approach. With feet on the ground in 50 U.S. states and a dedicated underwriting team for each client, we believe in the power of personalized service. This, combined with more than 125 years of worldwide expertise, means we provide a solid foundation to support your business goals. Comprehensive credit function support. When you work with, our team becomes an extension of your team. Our industry specialists conduct in-depth credit analysis and ongoing account monitoring to strengthen your credit management procedures. Tailored tools and resources. Our online policy administration system, EOLIS, simplifies policy management and provides instant, secure access to policy information and fast coverage decisions. International collection services. We provide the full scope of receivables management services. Our dedicated claims and collections units handle claims quickly and efficiently to take the worry out of managing unexpected default.

8 Your client experience believes in a proactive approach when it comes to building a strong client experience and we embrace the opportunity to be a key partner in our customers credit management processes. That s why we offer state-of-the-art services to help you meet your business needs in an efficient, streamlined manner. 95% of issues raised to ASD are answered within one call Advisory & Solution Department (ASD) The Advisory and Solution Department (ASD) is a diversified underwriting team within the customer service department. The ASD team provides you with a single point of contact, empowered to resolve almost any issue related to your policy, from new credit limits to claims. ASD also allows for more efficient service by routing customer service concerns directly to a dedicated staff member with no unnecessary delays and no automated directories. ASD offers live support available by phone or 12 hours per day. Euler OnLine Information Service (EOLIS) As a policyholder you ll have access to the Online Information Service (EOLIS). EOLIS empowers you with instant, secure online access to policy information, including the ability to obtain coverage decisions in real-time. Connecting to EOLIS enables you to: Fulfill new orders without delay by getting requests for coverage answered quickly Access your current policy coverage and decisions report Submit credit limit requests and monitor their status in real-time Submit claims online and access updates on claims activity at any time View buyer information and collection files in progress Create reports to monitor and optimize your accounts receivable pays 85,000 claims per year Claims Services When you insure your accounts receivable with, you can count on being paid for what you sell, even if one of your covered accounts suddenly faces insolvency or is otherwise unable to pay. The Claims Group within handles all pre-claim activity, and is dedicated to providing world-class customer service. Similarly, the First-time Claim Unit helps first-time filers receive specialized training to resolve their claim. The Claims Group is committed to handling claims quickly and efficiently to take the worry out of managing unexpected insolvencies and past due situations.

9 Collections Services As a credit insurance policyholder, collections services are included as an integral part of your client experience should you incur a loss. However, you don t have to be a policyholder to utilize these services. Collections North America (EHCNA) was founded in 1917 and has developed an excellent reputation within the U.S. credit granting community by providing businesses with reliable, customer-focused and results-oriented collection services. With global collections coverage in 150 countries, we offer: Results: We provide a full range of time-based commercial collections and receivables outsourcing services for large, small, local and international companies. Benefits: Through our online suite of services, EHCNA clients can place claims, review collector notes, run a statistical review of claims and gain access to a wide array of information including our proprietary debtor index. Reports: Obtain timely and thorough progress reports with standardized EHCNA summaries of assignments which can be delivered electronically and through regular mail. Accessibility: We have placed a team of District Managers across the country to offer immediate customer service feedback whenever there s a question, problem or special request. We welcome the opportunity for a face-to-face consultation. By working with Collections North America you can free up internal staff to focus on the credit function and reduce or eliminate the internal costs associated with in-house collection efforts. In addition, we work on a contingent fee arrangement in most cases, so you can be certain that your cases will command our full attention.

10 North America Headquarters 800 Red Brook Boulevard Owings Mills, MD Phone: Fax: Regional Offices Eastern Region New York One Penn Plaza, Suite 3325 New York, NY Phone: Central Region Chicago 3333 Warrenville Road, Suite 160 Lisle, IL Phone: Southeast Region Atlanta 400 Perimeter Center Terrace, Suite 75 Atlanta, GA Phone: California 3011 Townsgate Road, Suite 130 Westlake Village, CA Phone: Collections Collections Corporate Office 600 South 7th Street Louisville, KY Phone: Canada 1155 René-Lévesque Blvd West, Suite 2810 Montréal (Québec) H3B 2L2 Phone: Southwest Region Dallas Dallas Parkway, Suite 1060 Addison, TX Phone: To schedule a meeting with a representative, please call or eulerhermes.usa@eulerhermes.com for a free, no-obligation quote.