Not Such A Risky Business

Sector: Construction
Turnover: £11m

An independent family owned building suppliers business with eight branches in Bristol, Stonehouse and Swindon. As suppliers to the construction industry, they are usually last in line for payment.

Finance Director, Mark explains: “A builder takes financial risk on every project, which means that the buck stops with them. As a supplier to the building industry, we are at the end of the line when it comes to payment, which can often be delayed if a builder suffers financial risk. Insurance keeps us both trading.”

For this company, Credit Insurance works very well. Their policy is focused on transactions above a lower limit, and a discretionary limit is applied to accounts where a close working relationship means they can trade at a level both the customer and Kellaway are comfortable with. Claims are based upon the highest paid balance under the highest value of discretionary limit in the preceding 12 months.

Mark explained that the benefits of credit insurance go beyond recouping losses: “The most obvious benefit is that we get money back when losses are experienced, but really it provides comfort and a degree of certainty. It also means that we are able to take some risks that we would normally shy away from, or can extend our credit limits.”

Of course it’s not just small builders who are at risk of financial difficulty. During the last year we have seen many big companies go into administration because they are at the end of the line in the payment chain. Rok and Connaught are two such companies.

“We can also benefit from this relationship in other ways. For example, we wanted to determine levels of insurance for certain customers and CBF were able to find out the realistic values before we committed to an endorsed credit limit.”

“CBF are really responsive to our needs. Matt and his team are great, as are people like Katie and Faye. They’re really helpful and give us excellent guidance, picking up on things we may have missed and generally making sure the business is well protected.”

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