Benefits: Put Options are often available on distressed companies and provide 100% coverage with no deductible or co-insurance. Put Options are non-cancelable and do not restrict shipments made to customers with pending bankruptcies.

Drawbacks: Cost. An A/R Put Option contract, for example, may carry a premium fee of 1.95% per month at a cost of $235,000 per year for every $1 million covered. Premium rates are a moving target and fluctuate almost daily. Put Options cover losses caused by bankruptcies only. Protracted default (aka: slow payments) are not covered. Coverage applies to the contract period, between 6 to 12 months, and does not cover shipments over the contract amount.

The bottom line: Put Options are a good move to help grow revenue. Despite the high expense, protection provided by a Put Option can help a seller justify continued sales to a troubled client without taking on risk or shortening credit terms. The seller can ship confidently to the distressed client company. A Put Option can help to  increase sales as competitors are forced to lower their credit terms with the client, providing a considerable advantage over competition.

Have a question about credit put options? We can help. Feel free to email us using the form to the right or call 1-631-585-0960

Please contact us with interest in credit on any of the following companies:

Automotive

American Axle, Arvin Meritor, Dana, Delphi, Dura, Federal-Mogul, Ford, Lear, GM, Pep Boys, Visteon

Plastics/Packaging/Chemicals

Chemtura, Consolidated Container, Constar, Foamex, Graham Packaging, Lyondell, Basell, Equistar, Plastipak, Pliant, Portola, Propex, Solo Cup, Solutia, Tekni-Plex

Print/Paper

AbitibiBowater, Fraser Papers, Idearc, Lyondell, Basell, Equistar, McClatchy, RH Donnelley, Smurfit-Stone

Retail/Consumer Products

AC Moore, ACCO Brands, Best Buy, Blockbuster (US or Canada), Bon Ton, Brick Group, Borders, Burlington Coat Factory, Charming Shoppes, Claire’s, Dillard’s, Dollar General, Duane Reade, Eastman Kodak, Entertainment One, Gander Mountain, HD Supply, HH Gregg, Home Shopping Network, JC Penney, Limited, Liz Clairborne, Macy’s, Michaels Stores, Neiman Marcus, Office Depot, OfficeMax, Overstock, Pacific Sunwear of California, Party City, Pier 1, Rite Aid, Saks, Sears and/or Kmart, Sears Canada, Spectrum Brands, Sprint Nextel, Staples, Stein Mart, Toys R Us (US or Canada), Tuesday Morning, XM Sirius

This is not an exclusive list. Be sure to contact us with your inquiry.

Have a question about credit put options? We can help. Feel free to email us using the form to the right or call 1-631-585-0960

The rise in filings shows that businesses are still struggling to access working capital and are facing less market demand for products and services.  With shrinking margins, restrictive credit, and slower demands for products and services, any slight misstep in the management of a business can cause an immediate filing for bankruptcy protection.

The hardest hit sectors continue to be in real estate and retail and the effects of this has trickled down to other industries including services and manufacturing.  Bankruptcy filings are projected to continue well into 2010, especially with less than favorable expectations of consumer spending around the holidays.

Instruments such as credit insurance, factoring, and credit put options can help to reduce the risk associated with commercial trade particularly important in today’s economic environment.

Contact us today for further information.

If your customer is not listed here, please contact us with the name of the account, address, and credit limit you are seeking for an immediate quote for 100% coverage.

Have a question about credit put options? We can help! Feel free to email us using the form to the right or call 1-631-585-0960

While many traditional credit insurance companies refuse to take on the risk of certain major retailers, we have the ability to execute contracts  immediately without delay. Some major retailers that we provide 100% coverage on are:  Burlington Coat Factory, Rite Aid, Toys “R” Us, Sears, Kmart, Blockbuster, Office Depot, Office Max, Bon Ton, Borders, Dollar General, Claire’s, Michaels Stores, AC Moore, Staples, Overstock, Best Buy, XM Sirius, HH Gregg, Saks, Neiman Marcus, Dillard’s, JC Penney, Charming Shoppes, Macy’s, Limited, Duane Reade, Home Shopping Network, Stein Mart, Pier 1, Tuesday Morning, Party City, Pacific Sunwear of California, Sprint Nextel, Eastman Kodak.  This list is not exhaustive.  If your customer is not mentioned here, please contact us with the name of the account, address, and credit limit you are seeking for an immediate quote for 100% coverage.

Have a question about accounts receivable put options? We can help! Feel free to email us using the form to the right or call 1-631-585-0960

In response to the domino effect of the cash drain caused by slow paying customers, many suppliers attempt to create their own internal collections departments and take on the burden of collecting their own invoices. This tends to be an ineffective and costly process for most companies due to the skill and advanced systems required to be effective in recovery. It is critical not to allienate customer relationships while attempting to collect a debt and many companies do not strike a balance between utilizing both soft and aggressive approaches to collections resulting in limited success with consistent and timely recoveries. The net result for businesses that attempt to collect in-house without the necessary systems afforded to most collections companies are higher operating costs and inefficient results leading to longer DSO cycles that contrinue to drain company cash flow.

Outsourcing the collections efforts of a company’s accounts receivable simply makes good business sense. While there are many different collections programs on the market today, they are not all created equal. The longer a debt remains unpaid  the likelihood of default increases, and therefore, it is important for companies to turn over their delinquent accounts sooner in the delinquency cycle than later. Debtors turned over to the right collections company earlier in the process are handled with care and the softer approach greatly increases recoveries while older debts are handled more aggressively. With a two step process to collections recovery, DSO is proven to get shorter and shorter for many companies at low cost surprising to many business owners.

With companies struggling to gain market share and capital becoming less and less available, businesses must improve their collections recovery programs in order to survive. Outsourcing these functions to a reputable collections firm - early in the game - is a wise decison and is proven to reduce the amount of time receivables are recovered at a cost lower than in-house programs. In our next article, we will discuss the different type of programs available and the various approaches that can be implemented.

Have a question about collections recovery? Feel free to post on this blog or contact us directly at 1-631-585-0960.

• Credit Reports 
• Trade & Bank References
• Prior Payment History
• Financial Statements

These standard methods of credit research are universally known in the business of commercial trade, requiring a certain level of skill to be able to read, evaluate, and assess financial data to properly establish credit limits for buyers.  As you will soon discover - and maybe already know - using these tools does not guarantee results! The challenge many companies have relying solely on these resources is that no matter how acceptable a company may look on paper, there is really no way to determine with any degree of certainty whether the buying company will have financial difficulty in the future, and unfortunately, bad news is usually discovered too late to do anything about it.

Let’s assume, for example, that a supplier performs due-diligence on a buyer using any of the tools mentioned above and decides to extend a $500,000 credit limit. The supplier continues to trade with the buyer for several months, and since the buyer’s payment history has proven to be acceptable, the supplier decides to increase their credit limit to $750,000. Several months pass with no problems and the supplier agrees to extend yet another credit increase of $1,000,000 to the buyer. Everything seems to be progressing wonderfully, right? Not so fast.

The supplier, like many other companies selling on open credit, typically shift their focus from performing ongoing due-diligence on the buyer to placing emphasis soley on the good payment history of the buyer, continuing to sell to the buyer at very high levels for as long as the buyer continues to pay. Life is good! So it seems.

What the supplier in this example doesn’t know is that for the past several months this very same buyer has completely stopped paying their other suppliers….but they continue to pay their invoices to them like clockwork. Why is this important? Well, it’s a direct indication that the buyer is likely up to something and it isn’t all that good! A possible reason for this scenario is that the buyer could be getting ready to either shut down their operations, or they could be in the process of filing bankruptcy with the goal of reorganizing under a different name. In either case, it’s only a matter of time before the buyer defaults on his obligations to the supplier, leaving them subject to millions of dollars in unpaid products & services, and of course, negatively impacting the bottom line.

So how does a company get access to such sensitive information and know in advance when to reduce the credit line or eliminate it altogether without getting burned? It’s simple - it’s called Business Intelligence.

Business intelligence, or advanced credit reporting & monitoring, is a highly effective service used by companies which allows them direct access to real-time credit ratings on millions of companies worldwide. These credit ratings are the same credit ratings used by credit insurance underwriters who evaluate each business on an ongoing basis and assign a credit rating based on information and advanced knowledge on how each company is currently trading on the open market. So what does this mean to your company? Read on.

Imagine being able to log onto a website, enter your buyer information, and instantly receive the latest credit rating from an experienced underwriter right at your own desk? What if you knew how much credit to give a customer on the fly - knowing that the credit rating you receive is the same credit rating the credit insurer uses for their credit insurance policyholders? How powerful would it be to your business to have all of the work already done for you so you can concentrate on your core business and use your employee assets elsewhere? It’s very powerful - and is available right now.

With real-time information on your customers, you don’t have to worry about the exhausting steps and expenses associated with performing your own due-diligence on the companies you want to do business with. Of course, you can always continue to research your buyers as you normally would and use the credit ratings as additional support to your decisions …but let’s take Business Intelligence one step further. Imagine obtaining a credit rating score on a buyer in January and in April you receive a monitored email alert notifying you that your buyer’s credit score has been downgraded - or upgraded - and the reasons why. Do you think this information could be valuable to your company as you use it to extend more credit to your customers or pull back the line if the information is derogatory? You bet it would.

From our professional experience, there is nothing better than having a worldwide credit insurance & information organization looking over your shoulder watching over your clients keeping your company out of harms way. Ask D&B if they offer such a service - it doesn’t exist!  D&B is a data mining company and earns fees for selling information. The key difference between D&B credit ratings and credit insurer credit ratings is the vested interest.  Credit ratings provided by a credit insurer are the same ones used for policyholders - so you can be assured that they are the best credit ratings available anywhere!

Now for some bad news. Credit monitoring services at this level are not available everywhere as there are limited companies that offer this service. The good news is we represent an organization that is a leader in credit reporting & monitoring services on an international basis. Any company that is serious about having access to the latest customer information must try this service - these products can make a positive impact on the way you do business. Contact us today for more details.

Have a question or want to learn more about business intelligence? Feel free to post your inquiry on this blog or contact us directly at 1-631-585-0960.

Most people know by now that the banking industry is in a consolidation phase and that the capital markets have dried up considerably making it difficult for many corporations to borrow or obtain open lines of credit as they did in the past.Today, many companies are unable to qualify for traditional bank lending due to limited lending capital and stricter borrowing requirements imposed on business applicants.

To add insult to injury, many borrowers with active open lines of credit have been required by their lenders to bring the lines current making it difficult to access cash as easily as before.

Since business credit has become such a big challenge for many companies in this country, there are fewer and fewer options for businesses seeking cash. But there has to be a way for companies to circumvent the system and obtain immediate access to cash without the restrictions imposed upon them from the banking community, right?

Yes! The answer is Accounts Receivable Financing (aka Factoring).

Accounts receivable financing is a great option for many companies making it super easy to obtain cash advances on their receivables for an immediate stream of funds without having to wait 30, 60, 90, 120 days, or even longer, to get paid from their customers. In fact, depending on the program chosen, the cash from each receivable is guaranteed to be paid regardless if the customer fails to fulfill their obligations. What’s more, the collections efforts if each receivable is automatically transferred to the factoring company allowing businesses the opportunity to focus on their core competencies and not have to worry about the inefficient results of the collections process, while at the same time, having immediate access to cash to fund their operations.

Have a question or comment about  accounts receivable financing?  Feel free to contact us using the form to the right or call 1-631-585-0960.

US business bankruptcy filings have nearly doubled from this time last year. According to AACER’s count of commercial bankruptcies there have been over 7,500 commercial bankruptcy filings for the month of May, or 375 business filings per day.If you are business owner tracking these trends, you would agree that this number is staggering!  And it isn’t getting any better.

According to industry experts, it is predicted that there will be many more business bankruptices throughout 2009 and well into 2010. The question is, how many currently operating businesses will continue to put their cash flow - and businesses - in jeopardy without having bankruptcy protection on their receivables? It’s a difficult time for commercial trade and there are continued challenges ahead.  Trade credit insurance can be the answer for companies who simply do not want to become the next statistic.

Have a question about our trade risk strategies? Feel free to contact us using the form to the right or call 1-631-585-0960.

Many of our readers have asked if we have recent data on the number of publicly held corporate bankruptcies.YTD and we are reporting the following public statistics.As of March 31, 2009, there have been 64 total public company bankruptcies in the United States thus far, twice the amount from 2008, and three times the amount from 2007.

The combined total pre-petition asset figure for these 64 bankruptcies is a staggering $100,967,544,123!  This total asset figure is taken from each company’s most recent 10-K filings. These figures include all public company bankruptcies that have filed under Chapter 7 or Chapter 11. 

Have a question about our trade risk strategies? Feel free to contact us using the form to the right or contact us directly at 1-631-585-0960.