Trade Credit and Liquidity Strategies for Private Equity Companies

Private equity firms and their portfolio companies have been facing increasing challenges, including insolvencies, trade credit losses, and intense competition, even prior to COVID-19. Now, private equity companies are facing even more obstacles related to diminishing revenues, difficulty in collecting accounts receivable (AR), and liquidity shortfalls that put a company’s bank credit lines and their solvency at risk. It is extremely important for private equity buyers to get their portfolio companies operating at a profit as soon as possible.

Despite these difficulties, solutions are available. Trade credit insurance strategies can provide opportunities to maximize borrowing availability, improve cash flow and liquidity, protect the balance sheet, and drive organic revenue growth and profits.

Members of Marsh’s Private Equity and M&A Practice, as well as guest speaker Dan North, Chief Economist at Euler Hermes North America, hosted a webcast discussing trade credit and liquidity strategies for private equity and portfolio companies. The discussion centered on how to use trade credit insurance to support bank accounts receivable (AR) purchase facilities and maximize borrowing under asset-based lending (ABL) credit facilities.

Watch the replay to learn more about:

• An overview of trade credit insurance (TCI).
• Trade credit policy types and underwriting approaches.
  
• Using trade credit insurance as a tool to increase sales and market share.
  
• Using trade credit insurance in tandem with bank AR purchase facilities.
  
• The outlook for the US economy.
  
• COVID-19’s financial impact on businesses and the finance and trade credit markets.
  
• Client case studies demonstrating TCI-supported finance structures.