08 February, 2018 Case studiesResources
Effective credit management strategies
ESI Foods is forecasting strong growth with the continued support of Coface.
Since Eddie Quinn established ESI Foods in 2011, his company has built a strong reputation in Ireland for its fresh and frozen produce. As a result, annual turnover has nearly trebled over its six years of operation and growth has accelerated in recent years, from €1.85million in 2014 to €3.3million in 2016.
Credit trading is the norm within the food distribution sector in Ireland but profit margins are tight and large companies have been known to collapse with little warning, owing large sums.
It’s important for suppliers to have an effective credit management strategy because bad debts can lead to cashflow problems which are a common cause of business failure. As Eddie puts it: “I’ve been in the game a long time. I made sure we had credit insurance from Day 1 because I want to be able to sleep at night!”
At the same time, ESI Foods needed more than just a bad debt emergency service. “To grow the business we obviously need to increase our sales,” says Eddie “but we need to be selling to the right people.”
Eddie Quinn switched to Coface from another provider and has been a satisfied customer for the last four years.
“We weighed up all the pros and cons before going ahead. We thought the overall package was good but it was the level of service that was a deciding factor: unlike another company we had asked for a quote, Coface would always pick up the phone.”
After making the decision, setting up the policy was reassuringly simple. “We emailed across our customer details and Coface did the rest,” Eddie recalls.
To date, ESI Foods has made one claim on their Coface policy: €13,000, which was paid “very quickly”. But more importantly, Coface’s credit risk intelligence has helped the company avoid disaster, as Eddie explains.
“I once rang Coface about a potential customer in the UK. I’d already spoken to a credit agency who said they were A-Rated and safe but the Coface rating was negative. It was a difficult decision to accept at the time but I later found out that the company concerned had failed so Coface were certainly on the ball there. The order was worth £20,000 so a loss would have had quite an impact on the business.”
Coface’s online policy management service supports fast decision making which is particularly important within the time-critical food distribution sector. Eddie uses the online CofaNet Essentials service to make credit limit applications and also to apply for short-term additional cover for customers when their credit limit is insufficient.
“We’ve applied for TopLiner supplementary cover a couple of times,” he reveals. “Previously we would have had to pay a higher annual premium for this but now we can pay for just one to three months’ additional cover if we need it. We wouldn’t have gone ahead with the order otherwise so it is a really good innovation and the process itself was quite quick and smooth.”
Having taken on new staff, ESI Foods is poised for further expansion and Eddie forecasts a 20% increase in turnover in the next year. Looking ahead, he believes Coface is the ideal partner, helping him focus on the best customer risks and achieve sustainable growth.
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