Produce
Proactively Mitigate Risk and Grow Your Top Line
Faced with the often unpredictable business challenges presented by globalization, changing consumer behavior, and key demographic shifts, Del Campo Premium, Inc. added credit insurance to its risk management strategy to proactively mitigate risk as it grows its top line.
Industry:
Challenge:
Protection against catastrophic loss
Policy Benefit:
Safer sales growth
Challenge
Operating a successful business in the produce industry is fraught with risk. Even the healthiest companies can be suddenly and severely impacted by unexpected price swings, leaving suppliers exposed to considerable payment risks when customers are slow to pay or even file bankruptcy in the most extreme cases. “Our industry brings daily changes and challenges, which makes it hard for us to know if a customer will collapse overnight,” said Cathy Jimenez, Del Campo’s Credit Manager.
Rather than accept the seeming inevitability of at least some customer payment defaults, Del Campo Supreme, Inc., a Nogales, Ariz.-based distributor of high-quality tomatoes and peppers, chose to implement a seamless preemptive strategy to help mitigate its risk and protect its industry-leading market share.
" Our credit insurance policy not only offers us security in the event of non-payment, but also provides access to the robust knowledge we need to make informed decisions about offering credit to certain companies " - Cathy Jimenez, Del Campo's Credit Manager
Solution
Del Campo began working with Allianz Trade to insure its entire customer portfolio, which includes major food chains, food service operators, and retailers across the U.S. and Canada, in 2008. It now leverages Allianz Trade proprietary knowledge to inform credit limits and enhance the efficiency and effectiveness of Del Campo’s own in-house credit staff. Allianz Trade’ proactive credit monitoring is also there to warn of any risk exposure changes. “Allianz Trade seems to have the most accurate and detailed information on the financial health of the produce industry overall, especially at the global level,” said Jimenez.
As a seller of fresh food, Del Campo has access to another loss protection tool in the Perishable Agricultural Commodities Act (PACA). This U.S. law regulates fair trade in the produce industry and prescribes a method for creditor relief in the event of a bankruptcy, although the timeframe for making suppliers whole can be long and unpredictable. “Our Allianz Trade policy provides us with more options if a dispute occurs,” said Jimenez.
Results
The results of this approach speak for themselves. Del Campo has not experienced a single credit loss in more than a decade. “Our credit insurance policy not only offers us security in the event of non-payment, but also provides access to the robust knowledge we need to make informed decisions about offering credit to certain companies,” said Jimenez. And with accounts receivable secured with Allianz Trade’ AA S&P rating, financial institutions are more willing to provide Del Campo with more credit options.
Del Campo can now focus on growing its business without increasing its risk while also solidifying its brand position as the leading food supplier for a healthy and wholesome lifestyle. “If Allianz Trade underwrites the risk when we request a limit, then we can get on with growing our business,” said Jimenez. “Even though we have tight control of our accounts receivable portfolio, we always have that reassurance from Allianz Trade, just in case.”
This success has not gone unnoticed in the industry. “Local distributors call us inquiring about credit insurance,” said Jimenez. “Any cost is easily offset by the benefits and what you could lose if a customer went bankrupt or just failed to pay. I strongly recommend it.”