Red River Logisitics:
Credit Management Transformed

When Red River Logistics partnered with Euler Hermes, it already had an efficient in-house credit process but saw the opportunities that came with adding a second layer to the process and leveraging Euler Hermes’s financial insights and the protection that comes with the insurance policy.

“If the customer looks financially viable, we allow them up to our deductible, and after that, we know it’s time to engage Euler Hermes,” says Sanders. “We do that a few times a week. It’s been a tremendous value.”

Sometimes, Euler Hermes provides information about a potential client and advises that Red River Logistics pass on the opportunity. Sanders suspects this is what would have happened had Red River Logistics had a policy in place before they took on the client who filed for bankruptcy. Since Euler Hermes has access to a robust set of financial data and market insights, it would have likely flagged the company as high risk.

“Euler Hermes would’ve saved the day had we already engaged them,” says Sanders. “Now we live by whatever the risk stance is. If they say no, then it’s a no.”

In addition to Euler Hermes’s financial insight, Red River Logistics also uses the CAP program to evaluate and insure high-risk clients on top of the company’s primary policy. CAP coverage allows Red River Logistics to purchase additional coverage on many limits that have been fully or partially declined—something that may happen with riskier clients.

Euler Hermes helps Red River Logistics assess whether the new client is strategically worth the sale, in which case Red River Logistics can mitigate the risk with CAP coverage, or pass if it’s not the right fit for Red River Logistics at the time.

“When we find out a client needs that type of coverage, it’s great guidance for us,” says Sanders. “With Euler Hermes, we can ask ourselves if the sale is something we want to pursue or not.”

Since transforming its credit process with Euler Hermes, Red River Logistics has had no more surprises. It knows both when to pursue clients and when clients are not a good fit. Red River Logistics’ trade credit insurance policy provides the support and knowledge it needs to avoid losses from the start.

When Aaron and Nicki first invested in a trade credit insurance policy, they were made aware that Euler Hermes could help collect on outstanding receivables that happened even before the policy started. As long as the debts were up to one year old, Euler Hermes will provide collection support even if they are not on the current policy.

“Euler Hermes recovered 75 percent of what we had outstanding, and that we didn’t have any chance collecting ourselves,” says Sanders. At the time, Red River Logistics was not planning on hiring a collections agency to pursue the debt. In the past, the company tried that without positive results. 

Euler Hermes debt collection services turned out to be a happy bonus to the trade credit insurance policy.

 “We utilized the debt collection benefit of the policy, and I don’t know what Euler’s secret is, but it’s like magic: the checks were coming in on items that weren’t on the policy at all,” says Sanders. “We weren’t going to get anything, so we were happy to recover what we could.”

Red River Logistics’ trade credit insurance policy comes with EZ Cover, which allows Red River Logistics to make immediate decisions about potential U.S. and Canadian clients using Euler Hermes’ extensive business database. This flexibility is necessary for the logistics industry, where clients come in fast and the sales numbers stack up quickly.

“We can go to the online database, quickly take a look, and make sure that we’re extending the right amount of credit—if any credit at all,” says Sanders. “It is tremendous. Logistics is so fast. Customers don’t wait, and they don’t preplan weeks in advance—we’re all reactionary. We have to have something that can give us insight quickly. Euler Hermes provides that.”

In addition to EZ Cover, standard named coverage provides in-depth analysis and credit monitoring on international clients as well—information that is notoriously difficult to come by using standard methods. In fact, Red River Logistics put Euler Hermes to the test early on in the partnership, asking for insight into three international companies. Red River Logistics had previously been unable to take on all of the available business due to limited financial visibility.

“Our agent replied with several things that we could see and make decisions based on,” says Sanders. “We had one client that we wouldn’t give more than $50,000 in credit to, but now Euler Hermes approved them for named coverage, and we have about half a million dollars that they turn over every couple of months. They went from a bottom two-hundred client to a top ten. That was all Euler Hermes. We wouldn’t have done it without that assurance.”