Thomas Trade Blog

Mr. Credit – Making You Smarter Than Everyone Else

Jeff Thomas was interviewed on the Mr. Credit radio show, May 23, 2013. One of the featured topics was Credit Insurance. To quickly learn more about Credit Insurance, go to mrcredit

The credit insurance segment starts about half way through the show.

To view the Mr. Credit blogs or listen to any of the shows, go to mrcredit.org

WSJ.com – Want to Get Paid? Big Companies Make Small Ones Wait…and Wait

I totally agree with Serena Ng. You can read the full article at WSJ.com. Big companies have always taken advantage of their size. Walmart and McDonalds are known for exerting this type of control over their suppliers. Here on the West Coast, Fry’s Electronics has flexed it’s muscle in when it pays for goods. This is the nature of supply and demand. As a small company, you want the business with these large buyers but there are drawbacks and payment terms can be one of them.

 

There are ways to combat these tactics. You may be able to pass some of the lengthening payment terms on to your suppliers. You can attempt to increase your pricing to make up for the time value of money. If cash flows are a real issue, you can factor or establish a bank line of credit. These two methods cost you money that eat into profits, if you cannot pass on the costs. However, this is normally better than loosing the business. Browse the rest of the web site for more information on combating your big buyers.

Thomas Trade Blog

The economic news around the world is still a mixed bag. The three largest credit insurance companies (credit insurance is coverage on accounts receivables); Euler Hermes, Atradius, and Coface, have reported on Q1 and offered their thoughts on the rest of 2012.

The consensus is that North America is stabilizing with slow growth. Brazil, Chile and Peru remain low risk countries. But, Argentina’s outlook has been downgraded and remains higher risk along with Bolivia, Paraguay, Ecuador, and others in South America. Asia is showing signs of improving. Japan’s outlook has been upgraded. Many economists feel China’s economy bottomed out in Q1 after a fifth straight quarter of slower growth, although world risks could still hamper a turnaround. Australia and New Zealand, while still showing growth, have had their outlooks downgraded.

Europe is the big concern. There have been downgrades for five to eight European countries. The problems in Ireland and Greece are widely known, however; Spain, Portugal, Italy, and The Netherlands economies all continue to deteriorate. The United Kingdom remains weak.

If you are exporting, especially to the ‘hot spots’, you may want to consider insuring these sales. Credit insurance protects your receivables from default, insolvency, and political risk events. Insurance is significantly less expensive than Letters of Credit and are easier on the capital requirements for your customers. Credit Insurance is also easier to manage than LCs. Credit insurance is very affordable at less than 75¢ per $100 in sales and it can help you avoid losses by alerting you to risky customers and countries.

Jeff Thomas
Thomas Trade Insurance Solutions