« April 2006 Table of Contents
Equipment Focus: Finanial services
Seafood companies have many lending and risk-management options to choose from
By James Wright
April 01, 2006
Seafood companies, big and small, often need financial services. Whether it’s liability or credit insurance, accounts-receivable management or monetary lending, choosing the right company to work with could be the difference between having product to sell or not.
Mitigating risk saves money, especially in the perishable-foods business. Import delays and other hazards — spoilage, theft and aging receivables — can disrupt your supply chain and incur preventable costs. In today’s business environment, it is essential to be properly insured and to understand both your and your customers’ credit.
If your business is growing, securing sufficient working capital is key for expansion. Leveraging your accounts receivable or your inventory are two ways to fund growth opportunities, and choosing a lender with experience assisting the seafood industry can make all the difference.
Glenn Burroughs, VP of PNC Business Credit in Seattle, says that while many seafood companies qualify for factoring — or cash-for-receivables — asset-based lenders like PNC analyze a candidate’s inventory as collateral.
“We look at the value of assets a little more closely than commercial banks do,” he says. “They’re more of a balance-sheet lender. We look at liquidation values, which typically provide a higher advance rate. What it comes down to is the ability of the institution to understand [your] business. Everybody’s money is the same color at the end of the day.”
These companies can move you in the right direction or lessen your exposure to the risks of trading in the seafood industry.
Dun & Bradstreet
Dun & Bradstreet’s risk-management solutions have helped its customers “decide with confidence” for more than 160 years. Based in Short Hills, N.J., the global business information provider has a successful record of assisting companies with critical business decisions.
Founded as the Mercantile Agency in New York City in 1841, D&B now boasts nearly 5,000 employees worldwide and generates $1.4 billion annually. Its extensive database holds information in 82 languages on 100 million companies in more than 200 countries, covering 181 monetary currencies.
Today, the company is a leading provider of credit information and offers an extensive range of educational seminars on subjects including supply management and credit risk.
Dun & Bradstreet’s sales and marketing services and supply-management solutions are also available online to help its customers “convert prospects into clients faster,” according to its Web site.
Short Hills, N.J.
Euler Hermes ACI
Euler Hermes ACI, incorporated in 1893, insures accounts receivable and provides risk-mitigation services. One of its most-requested tasks is “pre-screening potential buyers” for its 200,000-plus policyholders, says company spokesperson Rick Ostopowicz.
Euler Hermes ACI and Euler Hermes Canada, with 45 offices in North America, checks financial trends, authors reports and provides credit insurance policies for domestic and export trade. It boasts proprietary information on 40 million companies in 160 countries.
“Any company that’s trying to turn itself around and improve itself has four common goals: lower expenses, increase the sales volume, increase profits and manage risk,” says John Caffrey, VP sales. “A Euler Hermes ACI trade credit insurance program achieves all four of those goals at one time.”
The Owings Mills, Md., company is a wholly owned subsidiary of Euler Hermes of Paris, which is majority-owned by Assurances Generales de France (AGF), under the umbrella of German insurer Allianz. Euler Hermes’ 2004 net income was 206.4 million euros.
Owings Mills, Md.
Last month, Íslandsbanki (ISB) changed its name to Glitnir. The bank’s domestic market is Iceland and Norway, but it also has subsidiaries in the United Kingdom, Luxembourg and Denmark. Later this year, Glitnir will open offices in Canada and China.
ISB, which saw record profits of 244 million euros last year, was founded in Iceland in 1904 and was operated by the Fisheries Bank of Iceland from 1930 until 1990. Glitnir, established in 1990 with a merger of four major banks, has been listed on the Iceland Stock Exchange since 1993.
The bank has served the seafood industry for more than a century. Its team of specialists — corporate financiers, industry analysts, credit officers and dealers — advises on financial risk and matches business partners in a global marketplace. Glitnir’s Seafood Stockwatch provides information on some of the largest seafood companies in the world.
LSQ Funding Group
If yours is a small- to mid-sized seafood business, then LSQ Funding Group should meet your needs. The Orlando, Fla., company, founded in 1996, works to provide specialized financing, like factoring, for growing companies. LSQ was “built on the premise that small businesses are the foundation of our economy,” according to its Web site.
“Our experience has shown us that importers, wholesalers and distributors can rapidly scale their businesses if they have a strong financial base and credit expertise,” says T.J. Gill, company vice president.
“Without these resources, growth can be slowed and risk is generally increased.”
LSQ has eight offices nationwide, and there are plans for two more this year. The company partners with major banks and credit agencies and offers online
account access. It guarantees sameday funding for submitted invoices and offers customized collection-management programs, a credit department and online transaction-management technology. LSQ boasts an 85 to 90 percent advance rate on funding and can also assist with supplier and payroll obligations and other risk-management services.
PNC Business Credit
PNC Business Credit is one of the nation’s top asset-based lenders, managing more than $10 billion in commitments.
Its parent company, PNC Financial Services Group, was founded in Pittsburgh more than 150 years ago and now has $92 billion in assets.
VP Glenn Burroughs says asset-based lenders like PNC look beyond receivables when analyzing businesses seeking loans and revolving lines of credit.
“[We do] comprehensive due diligence when evaluating a company,” says Burroughs. “In many ways we show faith in management; we’re banking on them as much as the company in its ability to sell [their inventory].”
PNC Business Credit’s wide range of financial services includes: accounts receivable loans, inventory loans, machinery and equipment loans, real estate loans, seasonal over-advances and term over-advances. Additional services include leveraged finance, securitization, private placement, derivatives trading, foreign exchange, treasury management and wealth, institutional and asset management.
(Refer to Web site for phone
numbers to its six regional offices)
Rabobank N.A. is an international financial services organization that provides lending and a range of products and services tailored for the food, beverage and agribusiness sectors. According to its Web site, Rabobank is the only non-government institution with a triple-A credit rating from Standard & Poor’s and Moody’s Investor Service — scores it has held for 20 years.
The name Rabobank is a combination of two banking organizations in the Netherlands, the Cooperative Central Raiffeisen Bank and the Boerenleenbank, or Cooperative Central Farmer’s Bank, which merged in 1972.
Rabobank operates in 37 countries, employs 57,000 people and claims more than $600 billion in assets. The company has operated in the United States for 25 years, originally founded in 1981 as Valley Independent Bank in El Centro, Calif., before being bought by the Dutch conglomerate in 2002.
Rabobank’s U.S. headquarters are in New York, with seven other main lending offices across the country.
Accurate and timely information about companies in the perishable food industry is Seafax’s specialty. The Portland, Maine, credit-reporting agency has served the seafood, meat and poultry industries since 1985.
Seafax expedites its clients’ credit decisions with specialized business and credit reports updated online twice every hour. Bank references, industry-specific trade references, background information and collection services are also available. The company closely monitors the industry and alerts its subscribers of rating changes and other company-specific news about their customers and competitors.
Seafax also annually publishes the Seafood Industry Reference Guide, a phone book-style directory for seafood and seafood-related companies in North America, among other marketing services.
Wells Fargo Business Credit
Wells Fargo Business Credit is a division of Wells Fargo Bank, N.A. of San Francisco, which boasts $482 billion in assets. WFBC is an asset-based lender that also provides factoring services and debtor-in-possession commercial financing.
Chris Stavrakos, senior VP and division manager in Wells Fargo Business Credit’s New York office, says the company has helped many seafood companies leverage assets and access the capital they need to achieve their goals.
“Seafood companies, in particular, are good asset-based lending candidates due to their traditionally high-quality inventory and quick-turning accounts receivable,” he said.
“As a leading provider in asset-based financing, Wells Fargo Business Credit provides local decision making and national scope as part of one of the largest and most respected financial services companies.”
San FranciscoAssistant Editor James Wright can be emailed at email@example.com