Credit Insurance Fuels Growth

Recently, Edwin Sahakian began a search for a solution to his credit management problems. He discovered credit insurance and redefined the way his company, Ardwin Freight, conducted business.

Industry:

Transportation and Logistics

Challenge:

Increased credit function support

Policy Benefit:

Thorough customer insights and risk information

Challenge

Over the past 30 years, Ardwin Freight, an asset-based regional truckload carrier in southern California, has built a strong business by offering transportation-related products and services that help customers seize important business opportunities. However, as the freight industry became more fiercely competitive and fragmented, Ardwin Freight faced important obstacles to its continued success.

More specifically, the company had to overcome several credit-related obstacles to its goal of greater and more consistent growth. First, the company’s conservative approach to extending customer credit hampered its plans to increase sales and grow the business. Second, the company’s credit approval process was inconsistent and overly cautious, causing the company to miss out on important new sales opportunities with new and existing customers.

In many ways, this conservative credit approach was understandable. “In the transportation industry, margins are low and turnover is high,” said Edwin Sahakian, the company’s CEO. “When your profit margin is 5%, you have to make sure you will get paid or else you won’t be in business very long.”

However, this approach to credit risk management did not serve company well over the long term. Facing the usual growing pains experienced by a dynamic business and the ups and downs of the economy, Ardwin Freight began to explore a new approach to credit risk management.


“Even if we had the ability to hire the best credit manager in the world, there are instances where no one can predict that a company will fail. A credit manager doesn’t give you a safety net, but credit insurance does.” - Edwin Sahakian, the company’s CEO

Solution

To help Ardwin Freight address these challenges and grow more consistently and profitably, Euler Hermes developed a customized trade credit insurance solution for the company. The foundation of this approach is access to the in-depth credit analysis and ongoing account monitoring necessary to increase the company’s confidence in managing credit risk. This support from Euler Hermes also allowed Ardwin Freight to streamline its procedures, making credit management and decision making more efficient. This, in turn, has improved customer relationships. 

Results

This combination of a strong credit insurance policy and access to proprietary knowledge and risk monitoring offered by Euler Hermes allowed Ardwin Freight to significantly increase customer credit limits and stimulate sales. “We have increased limits in some cases four-fold because credit insurance takes the uncertainty out of credit requests,” said Sahakian. “It gives us a competitive advantage because we are interested in customers that our competitors are not.”

Additionally, working with Euler Hermes has allowed Ardwin to more effectively manage its in-house resources. Company management is now able to rely on Euler Hermes’s deep experience, strong financial ratings and proven risk management and debt collections services when making credit decisions. “Even if we had the ability to hire the best credit manager in the world, there are instances where no one can predict that a company will fail,” said Sahakian. “A credit manager doesn’t give you a safety net, but credit insurance does.”

In addition to peace of mind, credit insurance allows Ardwin Freight to seize many sales and growth opportunities that it would have avoided in the past. “In the past year, we have grown 20%, which is much better than the industry,” said Sahakian. “Quite a bit of this could be due to our relationship with Euler Hermes.”

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