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.