Business Continues with Help from Trade Credit Insurance

 

Iconic footwear maker KEEN discovers business as usual can continue with the confidence credit insurance affords.

Industry:

Apparel

Challenge:

Risk mitigation with under-pressure retail customers

Policy Benefit:

The ability to continue offering flexible terms

Challenge

As a leading innovator in footwear design and manufacturing, Portland, Ore.-based KEEN Inc. was a major supplier to traditional brick-and-mortar retailers. When online merchants began to explode and threaten the existence of these retailers, KEEN found itself with a retailer customer base that was struggling financially and at risk of failing.

By 2016, KEEN was facing an increasingly unpredictable marketplace. Yet, even as confidence in its customers’ ability to pay ebbed, the company still had to maintain its flow of orders to maintain sell-through—its own and that of its retailer customers. With weeks-long lag time involved in shipping from factories to distribution centers to individual retail stores, retailers require terms, typically 30 days and occasionally 60, that allow them time to pay for product and sell it without any interruption in inventory. However, as formerly strong-performing retailers began underperforming with some also carrying a heavy debt load, continuing to grant these terms created significant risks for KEEN.


“We’re able to have a much more symbiotic relationship with our sales department,” said Shawna Arneson, Senior Credit Manager

 

Solution

The answer to this dilemma came in the form of credit insurance. “We started to survey the marketplace and the [Euler Hermes] name came up very quickly,” said John Barron, the company’s CFO. “They have a very solid reputation in the industry and are very competitive.”

KEEN now works with Euler Hermes to obtain credit insurance to protect its accounts receivable and leverages its newfound freedom to seize growth opportunities. For example, in the past, KEEN would have been reluctant to do business with highly leveraged companies. With credit insurance in place, KEEN can mitigate these risks on a case-by-case basis in order to  maximize sales and minimize risk.

Results

The results associated with having credit insurance are occurring throughout the company. The credit department is working closely with sales to support new opportunities. “We’re able to have a much more symbiotic relationship with our sales department,” said senior credit manager Shawna Arneson. “When they bring us a new account, most of the time we’re able to support that new account with a credit line.”

Euler Hermes support during the credit decision-making process is also crucial. When KEEN has questions about changing circumstances with accounts, the company routinely consults with Euler Hermes on what credit limits it should be offering. “My team has more autonomy when we do credit reviews ourselves because we’re running them through Euler Hermes,” said Arneson.

This type of support from Euler Hermes strengthens the entire credit cycle. “We felt that the current level of credit risk was something we could not evaluate all on our own,” said Barron. “Having support from an independent party like Euler Hermes allows us to manage that credit limit appropriately.” He noted that this level of support also gives the company confidence to ship to new and existing retailer customers proactively and safely, which has led to a significant increase in revenue. “We’ve been very satisfied with Euler Hermes’ cost benefit,” said Barron.

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