Situation
Until 2009, the previous financial crisis, this global player was credit insured. At the time, when the credit insurer rigorously and massively withdrew coverage on accounts receivable, the company decided to stop insuring. From then on, the Accounts Receivables department assessed the debtor risks itself and, by its own admission, managed to limit losses. Until now.
Increase in financial risks
During the outbreak of the COVID-19 virus and multiple lockdowns of shops worldwide, they once again faced a crisis. With various support measures, this multinational eventually got through the crisis, but they now realise even more that the financial risks increase significantly. With the elimination of state aid, tax deferrals from their debtors, the increased costs of energy and transport, as well as the real increased risks of another lockdown (in the countries with which they do business), this global player is aware that they are wants more visibility on the creditworthiness of its debtors worldwide. It also wants to hedge financial risks with credit insurance.
Because in 2020/2021, part of the turnover was lost and a large part of the costs were not compensated, pressure also comes to bear on the coverage provided by credit insurers on this business. Suppliers thereby limit the amounts and instalments they are willing to have outstanding at most, which in turn puts pressure on available working capital. Again, the effects of corona were reflected in the 2020 figures.
Solution
First, Xolv provided insight into the creditworthiness and financial ratings at various insurers. The question we asked ourselves was: "What is the so-called risk appetite among insurers and what is it based on?" By conducting a comprehensive analysis, by viewing and comparing exposure per insurer - the so-called Xolv X-files approach - it emerged that one of the insurers felt less comfortable. We engaged our client and the insurer, with the help of a tripartite meeting at board level. This resulted in the insurer broadening its so-called exposure to our client.
To the satisfaction of both parties, all suppliers insured with this insurer now get the necessary cover and comfort by being willing to deliver on credit again.
Result
Due to the fact that this group has substantial growth plans, in both existing and new markets and countries, Xolv was asked to carry out a comprehensive analysis of its existing debtor portfolio, as well as potential prospects. By means of our so-called Xolv X-ray approach, we create a scan, so to speak, through which we can determine the Probability of Default, make visible the probability of default.
After performing this scan, we also find out where the risks are highest and test this against our client's own debtor experiences. We also see which prospects are rated low and high. As a result, we advise them on which prospects they can best focus on. Because, a good customer is a paying customer, right?
This strategy chosen by Xolv, in close cooperation with this satisfied new relationship, ultimately proved to be the basis for further cooperation.
More information
Are you having problems with your suppliers about coverage on your business? For us, it does not matter where these suppliers are located, or with which insurer they are insured. Xolv helps you with your entire supply chain.
Contact us and we will be happy to help. Because only when your supplier is satisfied will you get your raw materials or goods delivered, and, in turn, keep your customers happy!
