Nine credit insurance tips as relationships change in 2010 with underwriters, suppliers, buyers, lenders and peers

By Rob DowneyThe sculpture "Apollo and Daphne" by Bernini in the Galleria Borghese (from a file from the Wikimedia Commons)

Long ago, in the days before the crisis (B.C.)… Apollo, god of light, poetry, and eternal youth, the son of Zeus & Leto, was betrothed to Daphne – daughter of the River god, Peneus – and she was a lovely lithesome athlete. Fresh from defeating Python with his bare hands, brash Apollo made fun of chubby be-winged Cupid and his small bow. Impulsive Cupid shot a golden Arrow of Love into Apollo’s heart, but a lead Arrow of Revulsion into the heart of Apollo’s fiancee Daphne. 

Both utterly besotted and frustrated, Apollo chased the fleeing, frightened Daphne through the woods of Olympia for a year. Too tired to run anymore, she asked her father’s help to escape Apollo. Peneus cleverly turned his daughter into a laurel oak tree – source of royal staves and Olympic leaf crowns – so she could be forever near him on the banks of the rivers he ruled. 

Apollo was completely flummoxed. He was still under the "curse" of Cupid’s Love Arrow, but now seemed forever thwarted. He asked his father for help that he might catch his beloved, and hold onto her for eternity. Zeus turned Apollo into the gentle Spring wind that still beautifies the landscape to this day, when these lovers, the Vernal wind and laurel oak tree, caress.

Sound familiar? Things were going well in the trade finance and credit insurance business from 2003 through mid-2008; but we got a little cocky; then somebody shot a couple arrows. Impossibly difficult problems overwhelmed us for a year; a new reality set in; we reconsidered our options; got some help; and changed our very natures in order to accommodate new opportunities.

"Want the change... Every happiness is the child of a separation it did not think it could survive." – Rainer Maria Rilke. (Please click here to read the full poem, Sonnets to Orpheus, Part Two, XII.)

Be leery in the coming months about the routine response, the usual strategy. Facts that prove themselves through the harsh circumstances to come in 2010 will be better for your company than the efficient rules of thumb from olden days. Below are nine situations that will be different with your supplier, buyer, lender and internal company relationships in 2010, compared  to 2007 (B.C.).

• You will need to get audited financial numbers on your buyers in 2010, almost always, for almost all of them
• You will have to know more about your buyers’ buyers than ever before
• Be ready to provide financial information on yourself to key suppliers
• Whether seeking or providing information, expect to sign a lot of Confidentiality & Non-Disclosure Agreements (CNDAs)
• Lenders will ask more questions, move more deliberately, and require more lead time when providing trade finance solutions
• Expect to participate more significantly in risk-spreading solutions you arrange with lenders or insurers
• Be prepared for higher costs, fewer options and less uniformity when seeking borrowing capacity or insurance limits
• Accept that 2010 will be another year to survive, a good year to re-commit to training, fundamentals, and team building
• Accept that the need for excellent credit evaluation skill will be permanent hence, whether improving people or systems

Finish this misbegotten year strong. Then have a Merry Christmas, and a Happy New Year!

(Rob Downey is one of the founding partners of International Risk Consultants, Inc. (IRC) www.irc-group.com – a globally-integrated trade-finance and credit insurance specialty brokerage, which serves as the operating member of ICBA for Asia, Brazil, India and the USA)

Comments

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