Achieving business growth requires a strong C-suite of leaders that have a vision for the future and a strategic plan to achieve it.
You need to bring your shareholders along for the journey, maintaining confidence in your shared vision.
It goes without saying that this requires strong communication and leadership skills. However, many CFOs and CEOs are also learning that they can leverage their trade credit insurance (traditionally seen as a risk-mitigation measure) to grow the business.
Atradius customer, Petro National, has grown tenfold in less than four years.
Petro National is a subsidiary of a large foreign oil company. Their Australian operation brings together leading suppliers of high-quality petroleum products and logistics solutions to provide tailored and highly competitive fuel products and services to its customers. Petro National has been an Atradius customer for three-and-a-half years, and CEO Brendan Evans credits this relationship with playing a key role in that growth.
According to Brendan, there are five ways trade credit insurance has helped Petro National to achieve this outstanding growth:
1. Confidence to build relationships
By managing and mitigating credit risk, Petro National’s management has had the confidence to build relationships with new customers and segments within the industry. This is because the company knows that unpaid debts won’t be a drag on the balance sheet; instead, they’ll be covered by the insurance policy.
Brendan Evans said, “Growth and mitigating risk go hand-in-hand. Trade credit insurance lets us minimise the potential for loss and provides confidence to expand the business on that basis.”
2. Cash flow to expand
Because Petro National can rely on getting paid, it has a dependable cash flow. This means the CFO and CEO can plan for the future more confidently and accurately, safe in the knowledge that debts will be paid either by clients or by their insurance.
Brendan Evans said, “When you have aggressive growth plans and want to mitigate the risk, trade credit insurance is important. Petro National has achieved substantial growth since taking out trade credit insurance with Atradius.”
3. Surety to shareholders
As a subsidiary of a large foreign entity, Petro National needs to give its shareholders, many of whom are unfamiliar with the local marketplace in Australia, confidence that the business won’t be impacted by non-payments. Trade credit insurance provides shareholders with that extra layer of comfort.
Brendan Evans said, “The fuel industry is a capital-intensive industry with large upfront outlays that are at risk if customers don’t pay. The accounts receivable balance is a significant asset for Petro National. Insuring this asset is key to providing surety to our shareholders.”
4. Profitability protection
Reducing bad debts is crucial to protecting profitability. Uninsured accounts receivable ledgers can lead to a significant risk of bad debt, which is debt that will never be paid. Businesses have to make twice as many sales to make up for that bad debt, which is why trade credit insurance is so valuable. It avoids this additional burden by paying out unpaid debts, keeping companies profitable.
5. Better business decisions
When looking at new customers, Atradius complements Petro National’s approach to credit-checking. As the insurer, Atradius forms a view of the customer’s creditworthiness and provides Petro National with feedback on where the credit limit should be for that customer based on the risk profile.
Before working with Atradius, Petro National manually checked trade references and sought market intelligence on potential customers. This was time consuming and inefficient, which is one of the reasons Petro National decided to work with Atradius to assess customers’ creditworthiness.
Brendan Evans said, “Largely, we won’t do business with a customer if Atradius won’t approve them. This helps Petro National to verify our own internal processes with regard to credit, and further reduces the risk of making business decisions that won’t contribute to growth.
“Working with Atradius is user-friendly and we can get a turnaround on limits very quickly. Not having to spend time on sorting our credit issues is a positive. Furthermore, over the years we’ve grown to appreciate the decisions that have led to not doing business with a customer, because it has highlighted the potential impact on the bottom line if we had gone ahead with those deals and the customer hadn’t paid.”
Petro National continues to grow, using trade credit insurance as a key growth tool.
Want to find out if trade credit insurance is right for you?
Book a FREE phone consultation with Joe Lewis who is the Joint Head of our New Business team. He'll learn about your business, your current credit management process and help you figure out if trade credit insurance is a good fit for your business. It's an obligation free discussion.