Credit Insurance, click here.
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Credit Insurance, click here.

on

  • 940 views

 

Statistics

Views

Total Views
940
Views on SlideShare
940
Embed Views
0

Actions

Likes
1
Downloads
25
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • 2 2 2 2 2
  • 34 22 22 23 23 1. Over 10 defined insolvencies. 2. Allows company to increase their credit lines with their customers without increasing the risk. 3. Some bank will give credit or better loan rates for insured receivables. 4. Source of information available to us would be cost-prohibiting for most policyholders. 5. Staff of highly trained analysts.
  • 17 16 16 17 17

Credit Insurance, click here. Presentation Transcript

  • 1. Export Credit Insurance for Managing risk, Improve Financing Facilitating Trade Kathy Edwards Global Business Solutions Corp.
  • 2. What is Credit Insurance?
    • Insurance against non-payment of accounts receivable
    • Protection of a major asset on your balance sheet
    • Collateral
    • Sleep Insurance
  • 3. What it is Not
    • A means to make a bad credit good
    • Primary source of repayment
  • 4. Advantages of Credit Insurance
    • Protection Against Bad Debt Loss
    • Increased Sales
    • Better Borrowing Position with Insured Receivables
    • Credit Information Resource
    • Collection Services
    • Factoring
  • 5. Types of Coverage
    • Commercial Risks
      • Buyer goes bankrupt
      • Death
      • Default of payment for any reason other than product dispute
    • Political Risk Transfer risk
      • Government preventing release of funds
      • war/revolution
      • currency inconvertibility
      • loss of import/export license (Contract Frustration)
  • 6. Catagories of Insurers
    • Public Underwriters
    • Private Underwriters
  • 7. Public Underwriters
    • Export-Import Bank of the United States
      • Defined programs and costs
      • Subject to US Government policies
      • Small business policies
      • Short term, medium term, long term
      • Single buyer or multi-buyer
      • Pay as you go to improve cash flow
    • Export Credit Agencies (ECA’s)
      • OECD guidelines
      • Insurance builds customer loyalty
    • Documentary Collections
      • Cover risk with credit insurance
  • 8. Underwriting Philosophies
    • Exporter
      • Length of time in business
      • Financial information
      • Credit approval experience
      • Losses
    • Underwriting Buyers
      • Trade References
      • Credit reports
        • D&B International
        • Coface
        • Graydon
      • Financial information
  • 9. Private Insurance Market Export & Domestic Coverage
    • AIG
    • Coface (f/k/a CNA)
    • Euler Hermes ACI (f/k/a Euler ACI)
    • Altradius Trade Credit Insurance (f/k/a Gerling NCM Credit Insurance)
    • FCIA
  • 10. Private Underwriters
    • Less stringent underwriting of exporter
    • Greater exporter responsibility for credit evaluation of buyer
    • Deficient exporter credit files may result in refusal of claim payment
    • Minimum premium payable up front
    • Lower rates but greater possibility of purchasing unnecessary coverage
  • 11.   Quotes from Private Insurers $27,000 $29,400 $30,000 $33,000 Estimated Premium on sales of $6 Mil .45% .49% .50% .55% Premium Rate $100,000 $0 $150,000 $20,000 Discretionary Credit Limit -DCL $40,000 $0 $50,000 $0 Annual Deductible 95% 90% 90% 90% Indemnity $1.5 mil $3 mil $2 mil $1 mil Policy Limit 
  • 12. Policy Assignment
    • Benefits of policy can be assigned to a bank or lending institution
    • Immediate availability of funds
    • Pass cost of funds to importer
    • Claims will be paid directly to the lender
  • 13. Credit Insurance as a Sales Aid
    • Open account sales
    • Better credit terms
    • Develop new markets
    • Less “Creative” sales terms from sales staff
  • 14. Replace Letters of Credit
    • Letters of Credit
      • L/C’s do NOT guarantee payment
      • L/C’s require expertise
      • L/C may cost the sale if a competitor offers open account terms
      • L/C’s tie up buyers’ funds or credit facilities
      • Insurance eliminates high local interest costs
      • Insurance eliminate bank fees, amendment fees, and discrepancy fees
  • 15. Final Word
    • Every asset on a balance sheet is insured
    • except accounts receivable
    • which, in some cases, account for
    • 50% of the assets of the business
    • Would that keep you awake at night?
  • 16. Dollars and Sense
  • 17. Sale to Mexico
    • Sale EXW $100,000
    • SHIPPING $5000.00
    • DAF(LARADO) $105,000
    • TERMS:
    • SHIP 60 DAYS FROM REC OF IRR COMF LETTER OF CREDIT.
  • 18. BUYER’S VIEW
    • LOC $105,000
    • BANK FEE 5% $5,250
    • SUBTOTAL $110,250
    • COST OF $$ * $3,325
    • LANDED COST $113,575
    • *I=prt. $105x19%/12x2 =
  • 19. 60 DAY OPEN ACCT WITH INSURANCE
    • EXWORKS $100,000
    • SHIPPING $5,000
    • DAF $105,000
    • CREDIT
    • INSURANCE* $1,000
    • FINANCE % $1,000
    • LANDED COST $107,000
    • *premium at 1% for 60 days
  • 20.
    • LOC PRICE $113,575
    • 60 DAY OPEN
    • ACCOUNT $107,000
    • DIFFERENCE
    • IN DELIVERED
    • PRICE $6,575
  • 21.
    • IS YOU “STUFF” WORTH
    • $6575 MORE THAN YOUR COMPETATORS