April, 16 2024
Sawmill group FM Timber relies on credit insurance from Allianz Trade when expanding its business
FM Timber is a privately owned sawmill company that manufacturers length-specific quality sawn timber and planed goods.
The company sawmills are located in Pihtipudas and Pyhäntä in central Finland, where they are surrounded by an abundance of raw materials. All FM Timber products are made from wood harvested from nearby forests or from leased areas in other parts of the country.
Since its founding in 1997, FM Timber has been actively increasing its export trade. Important markets have been established in Asia, North Africa, Central Europe and North America.
According to Chief Sales Officer Mikko Luikko, the company’s ambition is to double its turnover and production while maintaining its status as a reliable supplier of timber products to global markets. Allianz Trade is a vital part of achieving that mission.
“Credit Insurance is a very important part of the business, especially when we enter new markets. We have a clear company policy that we will not do business with any customer unless we get credit insurance, a letter of credit or payment in advance,” says Mikko Luikku.
Credit losses are a serious matter
FM Timber has been working with Allianz Trade for two years and even though the relationship is relatively new, it has already provided stability and security for the owners.
“We can sleep better when we have someone checking the customers’ financial situation on our behalf. Credit insurance from Allianz Trade informs us of our customers’ different financial situations and allows different credit limits for each. In our industry, margins are quite low and credit losses are a serious matter for our financial wellbeing,” says Mikko Luikku.
Mikko Luikku has sold billions of euros worth of timber over the past 30 years and has generally had success in collecting payment.
“In some cases, I’ve had to resort to support from the credit insurance company. That has helped solve the situation and forced the customer to pay. Sometimes quality issues can occur due to transport damages making the customer delay payment. But even then invoices should be paid in due time and claims should be handled separately,” says Mikko Luikku.
Credit insurance helps evaluate potential risks
According to Mikko Luikku, one of FM Timber’s strengths is building long-term business relationships that result in a larger volume of reliable customers whose backgrounds the sawmill knows intimately.
“In case a customer’s business situation changes, they inform us, and we can sell our goods to a different customer,” says Mikko Luikku
With today’s geopolitical situation and an economy still affected by the pandemic, a customer’s situation can change very quickly.
“With credit insurance, we can evaluate potential risks and alter our sales volumes to areas with fewer risks,” says Mikko Luikku.