Trade Credit Insurance Helps Manufacturing Client Focus on Future Growth Plans

Background 

A manufacturer of flexible packaging, tin cans, containers and metallic caps, receivables presented around 50% of their current assets and considered at par with industry standards.

The manufacturer has a strong reputation and long standing commercial relationships with its current buyers, which are spread across the MENA region, and are  looking to further expand to other markets in Africa. Given their active operations with many economically challenged countries and longer payment terms, the clients’ banks were fairly skeptical in offering a receivable finance facility to meet their longer working capital needs. Additionally, most of these countries were severely impacted by strict lockdown and travel restrictions, where the banks had  concerns about  extending any working capital finance. 

Solution

Marsh Specialty approached the insurance market in order to cover the client’s credit turnover, which was in excess of USD 200 million. The insurers we approached had a positive record of accomplishments and updated information on most buyers which supported the client’s credit limit requirements.  However, some of the buyers in the client’s portfolio had large coverage gaps, which was addressed by the Marsh team approaching a top up insurer to support to fill the gaps. 

Impact

This helped our client continue to provide for incremental business requirements and get the required support from the banks to provide necessary financing on the back of their acquired credit insurance, allowing them to focus on their future growth plans. 

Outlining the benefits trade credit insurance has offered our manufacturing client below.

  • Access to competitive financing arrangements backed by credit insurance coverage 
  • Transfer of the payment deferral risk from their account receivables concerns to an A Rated insurer that offered extensive assessment backed up by accurate and up-to-date information
  • Gained the confidence of their buyers in these difficult times by supporting their business 
  • Captured significant market share with a strong access to the Middle East and Africa region