Decision Vision Episode 173: Should I Purchase Trade Credit Insurance? – An Interview with Janelle Foy and Carlos Garcia, Allianz Trade
On this episode of Decision Vision, Janelle Foy and Carlos Garcia of Allianz Trade joined host Mike Blake to discuss the ins and outs of trade credit insurance. Janelle and Carlos explained how this insurance comes into play and what it provides for, why this insurance is a reliable source of due diligence of trading partners, and much more.
Euler Hermes North America Insurance Company and its affiliated debt collection company are part of the Allianz group and market their products and services using the ‘Allianz Trade’ trademark. They are the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit, and political risk.
For over a century, they have been helping businesses like yours anticipate risks, act with speed, make informed decisions and grow securely. Headquartered in Paris, they are present in more than 50 countries with 5,500 employees. In 2021, their global business transactions represented 931 billion Euro in exposure.
As a member of the Allianz Group, they are a strong global community committed to a culture where both people and performance matter. They truly care for their employees and their individual needs and aspirations. They all shape an environment in which everyone has the confidence to dream, to explore and to grow.
Janelle Foy, Senior Agent, Allianz Trade
Janelle just celebrated 15 years with Allianz Trade. She works in business development and is focused on fostering her clients aggressive sales growth while protecting against credit risk.
Prior to Allianz Trade, Janelle spent 7 years in sales and account management for BellSouth Business, selling telecommunication services to middle-market customers. She is an active member of multiple professional organizations and currently serves as President of the Secured Finance Network (SFNet) Atlanta Chapter.
Janelle lives in Chamblee, Georgia with her husband and two teenage sons.
Carlos Garcia, Sales Vice President, Allianz Trade
For over 15 years, Carlos Garcia has been consulting with a variety of companies in diverse industries to help them navigate the growth of their business.
As a part of Allianz Trade, he has access to a wide range of B2B trade receivables protection and credit management solutions, including credit insurance and debt collection.
His goal is to leverage the knowledge he has amassed over the years to help you deal with the inevitable hiccups that happen while growing your business. He can make sure your business continues to thrive in the face of the unexpected.
Mike Blake, Brady Ware & Company
Michael Blake is the host of the Decision Vision podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms, and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth-minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
Decision Vision is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision-maker for a small business, we’d love to hear from you. Contact us at email@example.com and make sure to listen to every Thursday to the Decision Vision podcast.
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Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:21] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:44] My name is Mike Blake, and I’m your host for today’s program. I’m the Managing Partner of Brady Ware Arpeggio, a data-driven management consultancy which brings clarity to owners and managers of unique businesses facing unique strategic decisions. Our parent, Brady Ware & Company, is sponsoring this podcast. Brady Ware is a public accounting firm with offices in Dayton, Ohio; Alpharetta, Georgia; Columbus, Ohio; and Richmond, Indiana.
Mike Blake: [00:01:08] If you would like to engage with me on social media with my Chart of the Day and other content, I’m on LinkedIn as myself and @unblakeable on Facebook, Twitter, and Instagram. I also host a LinkedIn Group called Unblakeable’s Group That Doesn’t Suck, so please join that as well if you would like to engage.
Mike Blake: [00:01:24] Today’s topic is, Should I purchase trade credit insurance? According to the Federal Reserve, U.S. non-financial firms had $4.5 trillion in trade credit outstanding, equal to approximately 21 percent of gross domestic product.
Mike Blake: [00:01:40] So, accordingly, trade credit is the largest form of short term business financing. And I want to cover this topic today because, even though it’s a niche topic, it’s foundational to the import-export business. And we haven’t really done foreign business in a while. I don’t remember what podcast number it is, it had been within the first 50, when we had Gene Plavnik on to talk about Should I export? And we didn’t really touch upon trade credit there is my recollection.
Mike Blake: [00:02:17] But I think what we’re going to find from one of our guests is that one of the key things that allows import-export to go, especially at scale, is the existence of this kind of insurance product. And so, whether you are exporting, or perhaps even importing, now or you’re thinking of doing so in the next couple of years, this is a topic that you’re going to want to understand as you go down that path.
Mike Blake: [00:02:48] So, joining us today are Janelle Foy and Carlos Garcia of Allianz Trade. Janelle just celebrated 15 years with Allianz. She works in business development and is focused on fostering her clients’ aggressive sales growth while protecting against credit risk. And protecting against risk is something near and dear to my heart. Prior to working with Allianz, Janelle spent seven years in sales and account management for BellSouth business, selling telecommunication services to middle market customers. She’s an active member of multiple professional organizations and currently serves as president of the Secured Finance Network, Atlanta Chapter.
Mike Blake: [00:02:48] For over 15 years, Carlos Garcia has been consulting with a variety of companies and diverse industries to help them navigate the growth of their business. As part of Allianz Trade, Carlos has access to a wide range of business-to-business, trade receivables, protection, and credit management solutions, including credit insurance and debt collection. Carlos’s goal is to leverage the knowledge he has amassed over the years to help clients deal with the inevitable hiccups that happen while growing their business.
Mike Blake: [00:03:52] Headquartered in Paris, Allianz Trade is present in more than 50 countries, with over 5,500 employees. A member of the Allianz Group, they are a strong global community, committed to a culture where both people and performance matter. Janelle and Carlos, welcome to the Decision Vision podcast.
Carlos Garcia: [00:04:10] Thank you for having us.
Janelle Foy: [00:04:12] Thank you for having us.
Mike Blake: [00:04:14] So, let’s start off with something very basic, because I think a lot of our listeners are not going to necessarily be familiar with this topic, what is trade credit insurance and why do people buy it?
Carlos Garcia: [00:04:29] Well, trade credit insurance, it’s very, very easy to understand, but a lot of people want to make it very difficult. Imagine – to use something that everybody discusses and knows, brands – Samsung, so let’s say Samsung is going to go and sell $100,000 worth of T.V.s to Best Buy. Well, we insure is that if Best Buy goes bankrupt, disappears, slow pace, or there’s any type of political risk, if they’re in an export market, we’re going to pay them 90 percent of that loss. So, it’s basically an insurance when you give a customer terms.
Mike Blake: [00:05:15] Now, I think something that will be helpful is to explain to our listeners, and to me – because I don’t do a lot of import-export. I have some sales to foreign customers, but nothing of the magnitude you guys deal with – how do import-export deals generally work? And where does trade credit insurance fit into that process?
Carlos Garcia: [00:05:39] Well, from import-export, once you import the product, if you’re distributing it within the U.S., the minute that you reach out to us where we would approve a buyer, as soon as you cut that invoice and that product has left your warehouse, at that point is where the receivable starts and the insurance begins.
Carlos Garcia: [00:06:06] On the export side, it basically starts either it goes to the freight forwarder or you deliver it directly to the customer. That’s where the insurance starts when you’ve lost control of the product.
Mike Blake: [00:06:23] And so, how does it work? I mean, to me, it’s fairly obvious about how this works from an export perspective. You sell something. You expect to get paid for it. Something happens. All of a sudden you don’t think you’re going to get paid. That’s when the insurance comes in. But what about on the import side? How does trade credit insurance work on the import side?
Carlos Garcia: [00:06:53] It’s not a product for the import.
Mike Blake: [00:06:56] It’s not. Okay. I want to make sure I understood that.
Carlos Garcia: [00:06:58] Once you import the product, what you’re going to do with that product, so if you’re going to sell it to a customer and give them terms to pay you, for example, within the U.S., that’s where our insurance starts.
Mike Blake: [00:07:12] Got it. Okay. So, what are the reasons that deals go badly? What are the most typical reasons that your insurance is ultimately called upon?
Janelle Foy: [00:07:22] I think, like you had mentioned before, when you talk about that 4.5 trillion in trade credit outstanding, essentially, when you give somebody 60 day terms, you’re giving them a loan. It’s basically a small business loan. A bank would never do that without getting collateral, without getting financials, without getting credit terms, all the information that they need. But buyers expect you to do that on virtually no information.
Janelle Foy: [00:07:48] So, what credit insurance does is, essentially, provides that collateral for the loan. We’re going to help you know if that customer is a good customer and a strong one to work with. And then, if in the end they don’t pay you, we’re going to cover you and pay you for it.
Mike Blake: [00:08:02] Not being paid by a customer is something that is a risk, of course, whether it’s an international or a domestic deal. Why is that risk different when you’re exporting to a foreign country versus, say, a deal between a company in New Jersey and a company in Indiana?
Carlos Garcia: [00:08:27] Well, the biggest thing is because we cover political risk. So, if you’re shipping overseas and there’s a political risk situation, that’s the biggest thing of exporting why people require the insurance or the financial institution requires the insurance. It’s because of that political risk factor.
Mike Blake: [00:08:48] Okay. So, let’s dive into that because I think it’ll be helpful for our audience to get granular. What are some examples of a place where political risk puts being paid at risk?
Carlos Garcia: [00:09:04] A real easy one, for example, is a couple of years ago when Argentina or Venezuela said, “Hey, you’re not pulling any money out of the country to pay a U.S. debt.” So, a situation like that where the government gets involved and either seizes the products at the port or says, “Hey, there’s no money coming out of here to pay U.S. debt.” Those are political risk events that would cause our insurance to trigger and cover that.
Janelle Foy: [00:09:32] I think another timely example is sanctions in Russia. We had a client with a barge full of perishable goods that we’re shipping into Russia. We put the sanctions in place. They were no longer able to deliver those goods. So, that then becomes a political risk claim as well.
Mike Blake: [00:09:50] I’m glad you mentioned that because I was going to ask about that. One day you’re able to do business in Russia, another day you’re not. And, to me, the interesting risk or dynamic that political risk brings into these deals is, you may have a customer who is perfectly willing and able to pay. But because of some policy intervention, they may not be allowed to. Russia’s interesting and that the policy intervention has not been within Russia itself, at least not initially. It’s been on Western countries, including the United States.
Mike Blake: [00:10:30] But the more classic case for what you described, in Latin America, where they put in currency controls, for example. The point is that, even with the best of intentions, the buyer, the customer, may simply be legally prohibited from paying, even though they can and want to do so.
Mike Blake: [00:10:52] So, you bring Argentina – I’m curious about this – Argentina is a very interesting case because I’m old enough to remember at least two debt defaults. And we’re old enough to remember at least two currency devaluations where another comma was put on the currency, maybe two commas, in fact. I’m curious, in your experience, once a country kind of commits those acts, which then compel you to pay out insurance claims, how long does it take to get comfortable to go back into that country?
Mike Blake: [00:11:35] Because it’s kind of interesting how short memories we have when during the 1980s default, the chatter was, “Well, Argentina can’t default because nobody will ever put money into the country again.” Within five years, it was as if nothing had ever happened. I’m curious about that phenomenon. This is kind of a philosophical question, but just fascinates me, if you’re going to be an international risk, international credit, do you sort of have to have a short memory? Does that come with the territory?
Carlos Garcia: [00:12:06] Absolutely. From every aspect of what we do, we have a short memory. Our head underwriter tells me that all the time, when we go through difficult times and I tell him, “Hey, Steve. Do you think we learned that we’re not going to do this again?” And he tells us, “Hey, we’re going to have short memory and we’re going to do this and worse.” Because you never know what’s going to happen.
Carlos Garcia: [00:12:36] And in the situation with Argentina, yeah, sometimes we come off the political risk. Currently, we’re off the political risk. So, if you purchase credit insurance in Argentina, for example, we tell you, “Hey, this is excluding the political risk factor because the chances of there being a political risk event in today’s world in Argentina is extremely, extremely high.” But we do have very short term memory when it comes to things.
Janelle Foy: [00:13:05] And, ultimately, we are in the business of paying claims. So, we can’t live in a no risk market. Ultimately, we do pay claims to our clients, so we have to take on some level of risk.
Mike Blake: [00:13:18] So, I’m also curious, we hadn’t discussed this before, we talked about Argentina and talked about Russia, places which, historically, let’s just say, had had some volatility to them. Do you ever write policies with more, frankly, stable political environments? Maybe even somebody, the G20 or the G7, that we wouldn’t ordinarily have political risk. But maybe there’s a perception in each area where there could be political risk. Or is it purely so-called developing world?
Janelle Foy: [00:13:55] Political risk for certain countries is very valuable. But when we look at foreign receivables, there’s multiple reasons why companies buy them. A lot of banks will not lend on any foreign receivables that aren’t insured, so to help them prove a borrowing base and their lending capabilities.
Janelle Foy: [00:14:13] But, in addition, as much as we insure foreign receivables, we also insure domestic. So, companies look at it for a credit management tool. They look at it for an insurance product. They look at it to just protect the risk that is out there, regardless if it’s in Argentina or Germany, the risk is still there. And the ability to go collect a receivable in Germany is going to be just as difficult as going to Argentina and collecting it. So, that’s where we kind of step in and make sure they’re going to get paid for those receivables.
Mike Blake: [00:14:40] Yes. That’s really interesting, too. So, the political risk is not limited to a foreign or a distinct policy, but simply the risk of trying to collect on a judgment in a foreign judicial system is something that also is insured against.
Janelle Foy: [00:15:03] Absolutely.
Carlos Garcia: [00:15:05] It’s got a default. The easy way to understand it, is, we cover the inability to pay. Not I don’t want to pay. But it has to be I can’t pay for X, Y, Z reason. Not I don’t want to pay because the product was bad. Now, there’s got to be an inability to pay.
Mike Blake: [00:15:27] Got it. Okay. So, let’s say someone’s been listening to this and they’re thinking, “Oh, I really ought to think about trade credit insurance. I just didn’t know that this existed or hadn’t learned anything about it.” What is the process like to apply for an insurance policy from you guys or somebody similar to you?
Janelle Foy: [00:15:50] The process is really pretty simple. It’s an application and a recent copy of their aging report. Oftentimes, we can help them complete the application. But it’s a pretty simple process. Turnaround, we can do it in five to ten business days. So, we can have a quote for them and a proposal in front of them pretty quickly.
Mike Blake: [00:16:10] And over time, does a relationship with the customer matter? In other words, is it easier once you’ve done a deal or two with a particular customer? Do you find that it’s easier to underwrite more policies for that person? Is there benefit to that relationship to go back to, for example, you guys, Allianz or somebody else? Or is each opportunity purely a standalone exercise that’s evaluated on its own merits?
Janelle Foy: [00:16:41] We don’t generally write transactional policies. When we write a policy, it’s usually for a one to two year term. The idea being that then we bundle all of their customers in, or a portion of their customers, and we continue to insure those for the policy period. So, unlike, say, a letter of credit, where for every transaction you have to get a new letter of credit, with credit insurance, we set a policy in place and you’re covered and insured for all those buyers for the policy period.
Mike Blake: [00:17:09] Okay. That’s interesting. I didn’t know that. I presumed that these would be transaction-based policies. But, in fact, you’ll write a policy for all transactions, presumably between a customer and all their customers in one country for a fixed period of time. Is that how that works? So, like, if I were going to do business in Germany, for example, you’d be writing a one to two year policy on all the business that I do in Germany over a one to two year period?
Janelle Foy: [00:17:42] Essentially, we underwrite at a buyer level. So, they would let us know they’re doing business with ABC Company. They would tell us how much they need that insured for. And that goes to our local underwriting department. So, like you had mentioned earlier, we have offices in 50 countries. We cover 200 markets. So, if you have a customer in Germany, that request goes to our local German risk department, and they determine whether or not that customer is insurable.
Janelle Foy: [00:18:07] So, in addition to the insurance, you’re also getting a credit management tool that helps you understand if a company is insurable. We continue to monitor their risk throughout the policy period. And you know that ABC Company is insured for X amount of dollars. So, you know based on that policy exactly how much coverage you have on that particular buyer.
Mike Blake: [00:18:26] Oh, I see. Okay. So, it’s really focused on one particular trade relationship over a period of time, right? One buyer, one seller.
Janelle Foy: [00:18:37] Average is at a buyer level. The policy itself is combined of all those buyers, a combination of those buyers together.
Mike Blake: [00:18:46] Understood. So, that brings me to another question I want to make sure to ask, because it seems to me that bringing in trade credit insurance can actually have a useful sort of – no pun intended – collateral impact in that what you do must be a great source of due diligence. And that’s got to be one of the hardest things with a new foreign customer how do you kind of check them out. You know, is there a German or an Austrian version of D&B or Hoovers? Does that even matter anymore? But your analysis can be very useful tactical intelligence to the customer.
Carlos Garcia: [00:19:28] Exactly. An easy way to understand it, we’re like their credit manager with a checkbook. So, if your credit manager makes a mistake, you can’t go to them and say, “You made a mistake. I need 200 grand for this loss.” That’s what we do. We review the buyer, look at their financials, in some cases, make a decision. If we make a mistake, you receive a check.
Mike Blake: [00:19:52] Now, most of the time when we talk about doing foreign business, I think we automatically think about selling products to foreign buyers. But point of fact, of course, America is a pretty big exporter of professional services abroad, especially architectural services, among others. Can services be insured in this way as well?
Carlos Garcia: [00:20:18] Yes. Any service, any product, as long as you give terms, 30, 60, 90, 120 days, we can ensure it.
Mike Blake: [00:20:30] Okay. And I’m curious. This may be a silly question, but it occurs to me, I wonder if in the terms of a particular transaction there might be a question or discussion over who actually pays for the insurance policy. Is the insurance policy going to be paid for by the seller or the buyer, maybe both, depending on the structure of the transaction? Is that a thing or does the seller always pay for the insurance or maybe the buyer always pays? I truly don’t know.
Janelle Foy: [00:21:04] As a general rule, the seller will pay for the policy. But I’ve certainly had situations where a bank has required credit insurance and the bank has paid for the policy parent company, even the insurer’s supplier. There’s multiple cases where somebody else may pay for the policy. But, generally, as a rule, the supplier or the person that owns the policy and manages it, they’re the ones that pay for the premium.
Mike Blake: [00:21:27] Okay. And how long does it take? So, let’s say somebody wants to take out insurance on a particular trade activity, how long does it take from somebody contacting one of you guys? Assuming that the policy is writable, that that works out, how long does it take to go from phone call to being insured?
Carlos Garcia: [00:21:52] Two or three days.
Mike Blake: [00:21:53] How much?
Carlos Garcia: [00:21:54] Two or three days.
Mike Blake: [00:21:55] Oh. Two or three days. That’s pretty quick. So, you’re not going to get in the way of a transaction happening.
Carlos Garcia: [00:22:02] No, absolutely not.
Mike Blake: [00:22:04] Now, within the context of political risk, does that in any way cover currency risk or is that just a totally separate thing?
Carlos Garcia: [00:22:15] It’s separate. We don’t cover devaluation of currency.
Mike Blake: [00:22:20] So, in an insurance policy like this, how are they priced or how is the pricing expressed? And what I mean by that is, I have car insurance, so I just pay a number of dollars per month. But I think there are certain other kinds of insurance or financial instruments that are expressed as a percentage of the amount of the transaction or expected transactions over time or maybe something else. So, can you talk to me about kind of what the model looks like in terms of pricing these policies?
Carlos Garcia: [00:22:58] The policy, most of them, they go based on an insured sales volume annually and then it’s a percent. So, to give you a little bit of an idea. Let’s say a company comes up to us and says, “Hey, I want to insure my receivables. My sales on credit are $10 million a year.” Our underwriter will come back and say, “Okay. Your rate is going to be a quarter of one percent.” We take a quarter of one percent, multiply times 10 million, and it’s 25 grand a year. And we give you two options, either you can pay it in full or you can finance it 25 percent down in quarterly payments. It’s basically that simple.
Carlos Garcia: [00:23:37] We do have policies that are coverage based, for example, single debtor transactions. A big hot topic now as the cruise line, “Hey, I need $5 Million on cruise line.” We’ll tell them, “Okay. It’ll cost you 0.42 percent a month.” So, we have two options to price policies.
Janelle Foy: [00:23:59] And I think –
Mike Blake: [00:24:00] Sorry. Go ahead, Janelle.
Janelle Foy: [00:24:03] Well, I was just going to say, I think one thing to point out that the big misnomer in credit insurance is you do not have to insure the entire portfolio. So, if you only want to insure your export business, if you only want to insure key accounts, we can carve out that business. And, essentially, every policy is customized for the customer’s needs. So, depending on what they’re looking for, we can structure a policy to meet their needs.
Mike Blake: [00:24:26] And do the terms vary on the policy? My world is M&A, so I tell clients all the time that in an M&A deal, price and terms are dancing partners. And you might get a better price, but you may have to give up more strict terms. Or maybe from an insurance perspective, maybe there’s a “higher deductible” in order to lower your fees. Does that kind of conversation happen in your world? Or are the terms pretty much standardized no matter what you’re insuring?
Carlos Garcia: [00:25:01] No. There is a little bit of a wiggle room, you know, increase in deductible and increase of price share. But at the end of the day, there’s a cost to turn the lights on. So, at some point we’re going to say, “It doesn’t matter if you lower that another 20 percent, it’s still not going to change the price.”
Mike Blake: [00:25:24] So, when a customer approaches you for an insurance policy like this, what sorts of information are you going to be requesting to review?
Janelle Foy: [00:25:38] So, on the application, the information is pretty simple. We’re looking at the annual sales of what we’re insuring, and we talked about being able to segment your business. So, we look at the annual sales. In the event of foreign receivables, we look at how those break down by country. We look at the industry you’re in, your loss history, the terms you sell on. All those things kind of rolling together to determine the premium.
Mike Blake: [00:26:03] So, is there a minimum – not transaction. I keep thinking transaction. That’s not right. Is there a minimum amount of sales volume, let me put it that way? Or even a maximum sales volume that you or others like you will consider?
Carlos Garcia: [00:26:25] No. There is no minimum. What we have is a minimum premium. So, for a domestic policy, the minimum premium is going to be 10,000. For an export policy, it’s going to be 15,000, because of the coverage of the political risk. And, basically, there is no maximum.
Mike Blake: [00:26:40] Okay. So then, at that point, customers will self-select that. Obviously, if it’s a $10,000 transaction, spending on insurance doesn’t make any sense.
Carlos Garcia: [00:26:49] Exactly.
Mike Blake: [00:26:50] Interesting. Okay. So, I think one of your competitors, either directly or indirectly, is going to be somebody like EXIM Bank or Maeda over in Japan, entities of that nature who are designed to be in particular export promotion entities. And if I’m not mistaken, they also provide some sort of trade credit insurance, typically based on political risk. How do you coexist with them? Or where does it make sense to come to you guys versus to go to an EXIM Bank or a similar authority? How do you help clients navigate that decision?
Janelle Foy: [00:27:32] EXIM Bank really was developed to help support small businesses. And really where its strength is, is at that transactional level, like you were talking about earlier. So, if you do four or five transactions a year, small export business, that’s where EXIM really does well.
Janelle Foy: [00:27:49] Once you start getting into regular business and you really are doing a decent amount of volume on the export side, at that point, private insurance is going to be more cost effective. We also have the access to more information. So, we have the risk underwriters throughout the world that are providing the data that somebody like an EXIM Bank wouldn’t be able to offer.
Janelle Foy: [00:28:09] And in addition, we don’t have requirements for where the products are made. EXIM requires that a large portion of it be manufactured here in the United States. And, also, we can cover domestic receivables, and that’s something that EXIM can’t do.
Mike Blake: [00:28:24] How does the company prepare to work with somebody like you? What do they need to do in order to make your job easier so you can quickly and effectively put up an insurance policy in place?
Carlos Garcia: [00:28:38] Basically, it’s very, very easy. All we’re going to ask them for, like Janelle said, that information on the application. But moving forward, all we ask them is for three pieces of information. What’s the name of the customer you’re going to sell to? What’s their address? And how much you need? That will go to our underwriting team. And on the U.S. side, from instant to 48 hours, you’re going to get an answer. One of three answers. Either (1) the buyer is insured for that amount; (2) the buyer is insured for a lesser amount and the reason why; or (3) stay away from this buyer, they’re not insurable, and this is the reason why.
Carlos Garcia: [00:29:11] On an export, it’s a little longer. It could be from instant to five days with the same information. So, from a customer’s point of view, it’s basically taking it from a situation where they’re going from the credit manager sitting on their desk to review it, to maybe going to the credit manager, he or she looking at it, putting it in our system, making a decision, and now they can make a business decision, do they want to still sell to that buyer or not? So, it’s really not a lot of effort that they got to put on their part to get a transaction insured.
Mike Blake: [00:29:50] I’m talking with Janelle Foy and Carlos Garcia. And the topic is, Should I purchase trade credit insurance? So, a question I like to ask in almost every show is, Who shouldn’t get trade credit insurance? Is there a profile of somebody that maybe should be thinking about it but you kind of tell them, “Don’t waste your time. This probably isn’t the right kind of product for you”?
Carlos Garcia: [00:30:14] Customers that don’t give credit to their customer. Someone that does prepaid, COD, on delivery. But as soon as they want to grow, the only way to grow is for them to start giving terms to their customers. At that point, they have to come get the insurance. I would say anybody that’s got an accounts receivables should have credit insurance.
Mike Blake: [00:30:38] So, are there countries right now that are basically on a no fly list? Are there countries that pretty much an application is going to be dead on arrival that that risk is just simply uninsurable?
Carlos Garcia: [00:30:53] On my world out of Miami here, the biggest one is Venezuela and Cuba. Those are non-starters.
Mike Blake: [00:31:06] All right. So, this has been a good conversation. I’ve learned a lot. I’m sure there are questions that my listeners would have liked me to have asked or that our listeners would have liked us to spend more time on, if somebody wants to contact you for more information about this topic, can they do so? And if so, what’s the best way for them to do so?
Carlos Garcia: [00:31:30] I’m sure you’re going to provide our email and phone number. Janelle and I are readily available. You can just shoot us an email or give us a call. And if we don’t answer the phone on the second, within 24 hours, they’ll have a call from us.
Mike Blake: [00:31:48] That’s going to wrap it up for today’s program. I’d like to thank Janelle Foy and Carlos Garcia so much for sharing their expertise with us.
Mike Blake: [00:31:55] We’ll be exploring a new topic each week, so please tune in so that when you’re faced with your next business decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us that we can help them.
Mike Blake: [00:32:10] If you would like to engage with me on social media with my Chart of the Day and other content, I am on LinkedIn as myself and @unblakeable on Facebook, Twitter, Clubhouse, and Instagram. Also, check out my LinkedIn Group called Unblakeable’s Group That Doesn’t Suck. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.