Blueberries taste so good, ship so well and deliver such huge health benefits that he industry is growing by leaps and bounds—proving very profitable for those like Fall Creek Farm & Nursery with significant market share. But to maintain that leadership position, the company knew it could not stand still—the company had to continue to grow deep roots all over the world. Help expand revenue generated by sales to customers in foreign countries Increase viability of conducting business anywhere in the world.
Expand sales in foreign countries without risking nonpayment on large orders
Proactive credit risk management approach
As a leading distributor of fruit and vegetable plants, Oregon-based Fall Creek Farm & Nursery wanted to expand its operations to take advantage of a growing market for premium blueberries. In many ways, blueberries are the perfect product for a grower—highly profitable, easily shipped and with significant and acknowledged health benefits for the consumer—and Fall Creek was positioning itself to take full advantage of opportunities to expand its foreign market share by selling premium blueberry plants to commercial fruit growers.
Because it was targeting commercial growers in countries around the world, Farm Creek had to quantify and manage the business risks these sales create. “Measuring a potential customer’s creditworthiness in the U.S. and Canada is fairly simple, and we have legal means to pursue anyone who doesn’t pay their invoices,” said Boris Aust, the company’s CFO. “But some countries often have very little reliable information on customer payment history, and taking them to court can be costly with very little chance of ever collecting on an unpaid invoice.”
Given that Fall Creek relies on the value of its inventory and receivables to secure its bank loans and finance its growth, overcoming these challenges was crucial to the long-term health of the business. The company needed access not only to reliable credit insurance to protect against potential losses, it also needed access to comprehensive credit and company information worldwide and a reliable way to check out customer references in other countries. “We wanted to transact business with customers as quickly as possible, but we also needed to ensure before we extended credit that these customers would not default on large transactions,” said Aust.
“We can now deploy production infrastructure in a new country without having to duplicate the credit administration function. When it comes to credit insurance, Euler Hermes can take us anywhere in the world!” - Boris Aust, the company’s CFO
Fall Creek initially wanted to require letters of credit from global customers before completing a transaction. However, letters of credit can be complex and time consuming to obtain, slowing down transactions and tying up customer lines of credit.
After discussing the situation with its banking partners, Fall Creek began looking into a credit insurance policy with Euler Hermes that would allow it to manage both the commercial and the political risks of a global business. Credit insurance provides protection against loss if a buyer defaults on an invoice or fails to pay within the agreed-upon timeframe. “You never know when something might happen that causes a large customer not to pay,” said Aust. “Sometimes it can be something innocuousunrelated to the business, such as the owner suffering a major illness, that forces the business to shut downcreates problems.”
By arranging credit insurance from Euler Hermes, Fall Creek also gained access to Euler Hermes’s credit management capabilities. For example, Euler Hermes worked with Fall Creek to keep customer payment issues from advancing to the claims stage. In two situations, Euler Hermes extended the deadline before a claim needed to be filed and helped set up payment plans that allowed both customers to pay down their outstanding debt. “Euler Hermes took a sincere interest in wanting all parties to come out in good shape,” said Aust. “They allowed us to be flexible with our customers who had cash flow issues so that they were eventually able to pay us.”
Having credit insurance in place also allows Aust and his team make credit decisions faster so the company can start conducting business with new global customers as soon as possible. “Using Euler Hermes online tools, we are able to get customers through the credit approval process more efficiently,” said Aust.
By leveraging credit insurance and a more effective and faster credit management process, Fall Creek has been able to expand its market share around the world. Global sales in countries that include Mexico, Peru and Spain now make up 55% of the company’s revenue compared to 30% before its partnership with Euler Hermes. “We can now deploy production infrastructure in a new country without having to duplicate the credit administration function,” said Aust. “When it comes to credit insurance, Euler Hermes can take us anywhere in the world!”