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Trade Credit Insurance !
Agenda
! Credit Insurance Credit Terms & Sales Cycle
Key Benefits
! Policy Structure Policy Coverage
Claim Payout Example
! Market Trends Key Challenges Australian Agriculture
Insolvency Statistics
! Solution Proposed Solution for AgLink Next Steps Whats Required?
CRM Brokers Pty Ltd - ACN 088 887 138 - ABN 68 088 887 138 - AFS Licence 246622
Recommended Insurer: Atradius - Facts & Figures
! Atradius is the most international and integrated credit insurer in the world
! More than 160 offices in 45 countries
! Worldwide more than 3,300 employees
! Financial strength rating by A.M. Best is A (excellent) outlook stable and
A3 outlook stable by Moodys
! Access to information on 100 million companies
! Headquarters: Amsterdam (the Netherlands)
Atradius a Global Presence
! They operate where their clients are: strong local expertise
! They manage risk & collections wherever they have exposure as close to the buyer as possible
Oceania Australia New Zealand
The Americas Argentina1 Brazil Canada Chile Mexico USA
Middle East Israel2 Saudi Arabia Lebanon2 UAE1
Asia China Hong Kong India Indonesia1 Japan Malaysia1 Philippines1 Singapore Taiwan1 Thailand1 Vietnam1
Africa Kenya2 South Africa1 Tunisia2
Europe Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Iceland1 Ireland Italy Luxembourg The Netherlands Norway Poland Portugal Russia Slovakia Spain Sweden Switzerland Turkey United Kingdom
1 Co-operation agreements with local partners. No Atradius office or shareholding. 2 Associated company or minority interest in local business.
What is Trade Credit Insurance? Adding to the value chain
The Credit
Insurance Triangle
Financing Receivables
Credit Insurance Contract Cover of Non-Payment Risk
Risk Assessment and Approval of Credit Limits in Favour of the Insured
Delivery of Goods and Services Credit Terms Agreed
Insured Company (Seller)
Customer of Insured (Buyer = Risk)
Key Features Modula Policy
Atradius Modula is a revolutionary concept in credit insurance that allows you to build a policy to your specific needs. Atradius Modula provides:
! A flexible and tailored approach to credit insurance ! Access to an international recovery service ! First class online policy management system (Serv@Net) ! Cover for up to 90% of debt ! Dedicated account management support
Credit Insurance in Practice-Timetable Contract signed Dispatch & invoice Due date Probable loss
Claim / Ascertainment of loss
WaiOng period
e.g. 60 days e.g. 120 days up to Protracted Default
Credit limit decision
Apply internal credit management procedures for recovery
No cover for future deliveries
Date of loss / submit claim
Invoicing period (max 30 days from despatch)
NoOficaOon of probable loss / transfer for collecOon (within 30 days of MEP expiry)
Pre-credit period
Max extension period (MEP)
Credit risk period
Maximum payment terms e.g. 120 days
What are the Key Benefits?
Reduce Financial Risk
Risk protecOon- commercial & poliOcal
Protects Cash flow & profits
Reduce bad debt provisioning
Hedge against catastrophe risk
Peace of mind
Improve Cash Flow
Claim payments
Maximise debt collecOon
Access to finance
Access to collecOons service- some
contribute to costs
Support Credit
Management
Automated credit control via insurers
systems
Creates discipline/control
Second Opinion
Leverages market intelligence- i.e.
payment experience from clients across
Australia
Supports Sales Growth
Supports most compeOOve terms of
payment
Confidence to grow in new markets, with new customers or bigger contracts
Financial health check at tender stage
Whats Covered?
! Insolvency Includes the following:
! voluntary administration ! liquidation ! bankruptcy ! receiver / manager appointed
! Default Buyer fails to pay within the policy waiting period, this period starts from the due date
! Political Risk Losses in countries other than the suppliers country, including:
! foreign exchange blockage ! import bans ! war & civil riots ! contract frustration ! public buyer default ! natural disasters
Claim Payout Example
Invoices AUD $100,000.00
Exclusion of Tax (GST) AUD - $9,090.91
Amount covered AUD $90,909.09
Amount before indemnity % is applied AUD $90,909.09
Indemnity Percentage (90 %)
Balance AUD $81,818.18
Each & Every (first loss) AUD - $5,000.00
Amount payable AUD $76,818.18
Key ChallengesAustralian Agriculture
! Vagaries of the Australian climate ! Global price instability
! Long-term downward trend in farmers terms of trade ! Future growth largely dependent on exports - maintaining compeOOveness in the global market
* Source: Grant Thornton, Food and Beverage Study 2013
Insolvency Risk Australia