bank case studies: how edc can help
Post on 22-Jan-2018
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KEEP WORKING CAPITAL FOR DAY-TO-DAY OPERATIONSPROVIDE LETTERS OF GUARANTEE
WITHOUT TYING UP CASH FLOW
CASE STUDY:
Challenge: maple syrup company must post a letter of credit to the FPAQequivalent to 20 % of the inventory required for the year
How EDC helped: Account Performance Security Guarantee covers 100% of the letter of guarantee to the FPAQ
Challenge: small food distributor’s new French buyer wants payment terms of 60 days on 50,000 euro contract
Benefit to company: access to a new market to get new orders while being protected from non-payment risk
How EDC helped: Export Guarantee Program shares risk with bank to guarantee 75% on $500,000 line of credit
Benefit to financial institution partner: can offer complete solution to customer while sharing risk with EDC
INDIRECT EXPORT TO A SUPPLIERSUPPORT FOR POSTING LETTERS
OF GUARANTEE WITHOUT
FREEZING LINE OF CREDIT
CASE STUDY:
Challenge: SME lands $300,000 contract with mining company that requires a $150,000 letter of guarantee to offer a 60-day payment term
What they needed: to post a letter of guarantee while maintaining line of credit for working capital
How EDC helped: Account Performance Security Guarantee provided bank with 100% guarantee on $150,000 letter of guarantee
Benefit to company: gets the working capital it needs to fulfill the contract and get better payment terms from supplier
Benefit to financial institution partner: can offer solution to customer while transferring 100% of the risks to EDC
How EDC helped: Credit insurance increased bank’s risk protection while Export Guarantee Program allowed overseas inventory to be included as assets
Benefit to financial institution partner: can offer additional $1.5 million to customer’s line of credit while sharing risk
What they needed: working capital to fulfill contract and protection from exchange rate fluctuations
How EDC helped: Export Guarantee Program shared risk with bank to cover letter of guarantee and FX facility
Benefit to company: gets 400 000 $ of collateral from EDC to keep its working capital and fulfill the contract
Benefit to financial institution partner: satisfy customer’s need with a cost-effective solution and without requiring extra collateral
Benefit to company: gets the working capital it needs to fulfill 2 contracts and continue to grow internationally
Benefit to financial institution partner: can defer risk of financing company that doesn’t currently meet financing criteria while offering a temporary solution and build customer loyalty
Challenge: Canadian equipment company’s cannot leverage borrowing capacity on the assets of its growing Mexican subsidiary
How EDC helped: line of credit 100 % guaranteed by EDC to facilitate a letter of guarantee to the foreign financial institution
Benefit to financial institution partner: risk-sharing with EDC helped provide a comprehensive financing structure for customer
Benefit to partner financial institution: risk-sharing with EDC helped provide financing solution for customer’s acquisition based on customer’s foreign assets
How EDC helped: provided a term loan of $3 million over 5 years for acquiring assets in Brazil, as well as Political Risk Insurance
Benefit to company: gets the $5 million financing it needs to expand its operations to Brazil and protects assets and investments against certain political events
Benefit to partner financial institution: not limit financing capacity of the company’s additional needs and get a non-competing partner
How EDC helped: provided $2 million in equity to complete a private investor equity offer of $8 million
Benefit to company: gets the $5 million financing it needs to expand its operations to United States
Benefit to partner banks: EDC works with partner(s) rather than competing, enabling banks to offer a range of financing solutions to their customers
What they needed: leadership to help recruit North American banks to join the syndicate to raise $240 million
Benefit to company: gets the financing it needs to support its international expansion plan and working capital needs
Benefit to bank partner(s): EDC becomes a valuable partner in the syndication, able to fill shortfalls in required funding
Challenge: Canadian broker for the garment industry must pay suppliers upfront before receiving sales revenues
How EDC helped: 100 % export guarantee to the financial institution to cover the inventory in transit and in storage abroad with the operation line of credit
Benefit to company: gets the financing it needs to pay its suppliers and better manage its cash flow
Challenge: Canadian pharmaceutical company must pay packaging supplier on delivery, creating cash flow problems
Benefit to company: packaging supplier is persuaded to accept 60-day terms, enabling company to better manage its cash flow
Benefit to partner bank: With the 100% guarantee, bank can provide letter of guarantee without freezing customer’s funds
Challenge: Posting letters of guarantee and FX risk leaves optics and photonics company struggling for sufficient working capital
What they needed: solutions to post letters of guarantee without tying up working capital and manage FX risk
How EDC helped: Account Performance Security Guarantee to provide a 100% guarantee to the bank for letters of guarantee and foreign exchange risk
Benefit to company: has access to funds usually tied up for letters of guarantee and FX facility for day-to-day operations
Benefit to partner bank: Can allow customer full access to their working capital, without having to freeze funds
What they needed: protection from non-payment due to risks such as manufacturer’sbankruptcy; contractcancellation; and currencytransfer and conversion
Benefit to partner bank: as policy beneficiary, the bankis protected from risks of non-payment while able to offer its customer financingfor the advance payment
Partnership between EDC and (Name of the bank)
EXPORTING TO GROW
YOUR CLIENTS’ BUSINESS
– AND YOUR OWN
Challenge: A company with a 3M AED, 18-month contract in Dubai is worried about currency fluctuations
EDC’s solution: A foreign exchange contract guarantee on 100% of the collateral required for the foreign exchange facility
Benefits for the company: It received $400,000 in collateral from EDC, allowing it to save its working capital to complete the contract
Benefits for the partnering financial institution: It met its client’s needs with an affordable solution and without requiring other guarantees
Challenge: A company transporting goods across North America faces significant fuel costs, and is worried about variations in energy prices
EDC’s solution: A commodity hedging guarantee covering 100% of the collateral required by the bank for the commodity hedging facility
Benefit for the company: Getting a fixed price on fuel supply improved the company’s accuracy of budget predictions and ability to manage cash flow
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