Project Trade Credit

A Belgian processor of Chinese yarns and fibres for the carpet industry is keen to extend its activities to the United Kingdom, so it is obliged to do business in a new way: not through (reliable) wholesalers but through retailers and independent agents.

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ADD analysed the yarn processor's problem, focusing in particular on the issue of long payment periods in the United Kingdom: invoices are often paid only 60 days after the due date.

ADD proposed credit insurance in order to enable the Belgian company to continue dealing with this way of going about things. This offered the company an insight into the financial capacity of its customers.

Credit insurance provides basic cover for smaller customers. The company may also seek limits from the insurer for larger orders.

The second advantage of this insurance option is a rating on the basis of the company registration number. This allows the company to make an immediate assessment of each new customer's creditworthiness and decide whether doing business is feasible or not, taking account of the divide between the sales team anxious to do new business and the financial department eager to make a profit. A solution is to have a neutral assessment made of a customer or prospect.

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Project Trade Credit

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