Using Credit Insurance to Expand Globally

Genetec, a security platform provider for large businesses and government agencies that focuses on protecting its clients’ property, people, and assets, has experienced significant growth in recent years by expanding its operations and customer base globally. The Montreal-based company now generates 95 percent of its revenue outside of Canada.

Industry:

Security Software and Hardware

Challenge:

Expand to foreign markets with confidence

Policy Benefit:

Increase confidence of conducting business in foreign markets

Challenge

Genetec has consistently enjoyed strong demand for its products and services; however, growth for growth’s sake is not part of the company’s strategy. Senior leadership recognizes that they must manage the continued growth in a smart and sustainable way that supports long-term global business goals. A key part of this approach is deciding whether and how to extend credit to new and existing customers throughout the world while maintaining an appropriate credit risk profile.

A large part of the market for Genetec products includes large businesses and government agencies that often represent low credit risk. Since the company distributes its products through a network of installers and resellers, which tend to be smaller, evaluating their creditworthiness can be a long and difficult process that requires them to make some credit decisions based on incomplete information.

To ensure its continued growth and success, Genetec needed to strengthen its credit management process and resources. “We were looking for greater confidence when operating in foreign markets, for example, and we wanted to develop the ability to accept new customers in new markets without question,” said Alain Côté, the company’s chief financial officer. “We recognized that we needed access to the credit knowledge base and resources necessary to avoid taking on excessive credit risk.”

Many Canadian firms rely on basic risk protection from government agencies like Export Development Canada to support their international growth. However, given its global customer base, Genetec wanted to work with a commercial firm with a true international reach. As a private, global carrier, Euler Hermes has risk experts located directly in the markets its customers sell into – an informational advantage that can make a big difference. Euler Hermes also frees its customers from many administrative burdens typical of a credit insurance policy using our customer friendly Eolis online system for policy management, with no monthly sales reporting requirements.


“By working with Euler Hermes, we now have a different way of managing our credit. We have more structure and the policies necessary to help minimize our risks on a daily basis. This helps us develop our business while maintaining a balance between growth and risk.” – Alain Côté, CFO of Genetec

Solution

Genetec decided to partner with Euler Hermes to leverage the support and protection offered by credit insurance in order to meet its growth targets confidently. “The value of credit insurance is not just the protection,” said Côté. “We use credit insurance as a tool to expand our business faster and more effectively, not to solve a problem.”

More specifically, credit insurance provides Genetec with a critical and much-needed framework to support its credit decision-making process. By leveraging this framework, Genetec can make decisions about extending credit to new customers in unfamiliar markets much more quickly.

“Our internal credit staff uses that framework to evaluate credit requests in a way that wouldn’t be available to us on our own,” said Côté. “We can expand our business to smaller customers and customers in little known markets and make credit decisions rapidly and confidently.”

Now, the company can rely on Euler Hermes for support. “Euler Hermes has all of the financials on the customer,” said Melanie Bialas, credit and customer service manager at Genetec. “They analyze that information to determine how much they are willing to insure that customer. It is our responsibility to decide if we want to stick to the credit limit offered or if we want to take a bit more risk with a given customer.”

Results

With credit insurance and a strong credit management framework in place, Genetec has been pursuing strong and consistent growth. “Credit insurance helps us grow safely because we’re able to assess risk much easier,” said Bialas. Even before a sale closes, Genetec often reaches out to Euler Hermes for credit insight into potential customers and how that risk fits into the company’s entire credit portfolio.

In addition, using Euler Hermes’s credit assessments, Genetec is able to take any necessary action immediately whenever there is a change in an existing customer’s credit status. “Every time Euler Hermes has advised us of financial issues with a buyer, that turned out to be the case,” said Bialas.

However, these issues do not necessarily result in Genetec cutting off that customer’s credit. Instead, Genetec teams from sales, finance and credit management use this information to identify potential alternatives for that customer, such as a payment plan, pre-payments, or temporary licenses. Genetec has also been able to leverage Euler Hermes’s business intelligence power in the industry to push customers to pay on time to avoid damaging their own credit profile.

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