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Tupperware Files for Chapter 11 Bankruptcy

Tupperware Files for Chapter 11 Bankruptcy

Tupperware, known worldwide for its iconic plastic food storage containers, has filed for Chapter 11 bankruptcy. Years of declining sales, a failing business model, and a tough economy finally forced the company to file for Chapter 11 reorganization. 

 

Why it Matters

Tupperware’s liabilities are estimated between $1 billion and $10 billion. Compare that to its assets of only $500 million to $1 billion. This bankruptcy process aims to help Tupperware reorganize, but what does that mean for those waiting to be paid? 

 

By the Numbers

Here’s a snapshot of what Tupperware owes to its top 30 unsecured creditors: 

Creditor  Unsecured Claim Amount (USD) 
CHANG TSI AND PARTNERS LIMITED  $1,213,191.20 
BDO USA, LLP  $1,067,204.15 
FTI CONSULTING TECHNOLOGY LLC  $659,467.50 
SADA SYSTEMS INC  $593,548.88 
FM POLSKA SP ZOO  $570,438.12 
ORACLE AMERICA INC  $550,000.00 
   
Total  $10,078,920.47 

 

 

 

 

 

 

Why Unsecured Creditors Should Care 

In a Chapter 11 case, unsecured creditors are often at the bottom of the payment list. Recovering anything can feel like a long shot. But that’s where a strategic partner, like Securitas Global Risk Solutions, can make a real difference. 

 

How Securitas Global Risk Solutions Helps

  1. Reducing Risk: Securitas Global Risk Solutions specializes in trade credit insurance, which protects suppliers from non-payment risks. 
  2. Improving Future Deals: Going forward, suppliers and vendors can protect themselves by using our services to insure future credit exposures. This way, if Tupperware (or any other customer) falters again, they won’t be left empty-handed. 
  3. Expedited Claims Support: As experts, we help creditors understand and expedite insurance claims, maximizing their recoveries in non-payment scenarios. 

 

 

 

 

 

 

The Path Forward for Tupperware

For Tupperware, Chapter 11 is a chance to reorganize, cut costs, and—hopefully—emerge as a more agile, tech-driven company. Laurie Ann Goldman, President and CEO, hopes the process will help the company “transform into a digital-first, technology-led company.” 

But for unsecured creditors, that’s little comfort. They need protection now and in the future. Partnering with a reliable broker like Securitas Global Risk Solutions ensures that, even when the unexpected happens, they get paid. 

 

 

 

 

 

 

Bottom Line

The Tupperware saga is a cautionary tale. As creditors navigate this complex bankruptcy, having the right protections in place isn’t just smart—it’s essential. 

If you’re a supplier dealing with risky contracts, consider securing your payments through trade credit insurance from Securitas Global Risk Solutions. Because when companies go bust, you shouldn’t go down with them. 

 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.

The Impact of a Credit Loss on a Company’s Financial Performance

The Impact of a Credit Loss on a Company’s Financial Performance

Credit losses can have a significant impact on a company’s financial health. When a client fails to pay, the effect can be seen on both the income statement and balance sheet. Understanding how these losses affect your financials is crucial for maintaining stability and planning for the future. 

 

 

Why It Matters 

A credit loss occurs when a customer is unable to fulfill their payment obligations, whether due to insolvency, financial hardship, or other factors. The bottom line: When this happens, your company absorbs the loss, which can reduce profitability, strain cash flow, and weaken your financial position. 

 

 

The Income Statement Impact 

The income statement shows your company’s financial performance over a specific period. A credit loss directly impacts your profitability. 

  • Revenue reduction: When an invoice goes unpaid, you don’t receive the expected revenue. This results in a direct hit to your top-line earnings, reducing the total revenue reported. 
  • Increase in expenses: Credit losses often require setting aside funds as “bad debt expense” to cover anticipated non-payments. This increase in expenses lowers your net income, affecting your overall profitability. 
  • Net income drop: The combination of reduced revenue and increased bad debt expenses causes your net income to drop. What you need to know: Credit losses can significantly reduce profitability, even if your sales figures remain strong. 

 

 

The Balance Sheet Impact 

The balance sheet provides a snapshot of your company’s financial position at a specific point in time. Here’s how a credit loss impacts it: 

  • Accounts Receivable (A/R): Accounts receivable is the money owed to your company by customers. A credit loss means that certain accounts may need to be written off, reducing the total A/R value on your balance sheet. 
  • Allowance for doubtful accounts: Companies typically set up an allowance for doubtful accounts, which is a contra-asset account that reduces the total value of A/R. Credit losses increase this allowance, reflecting the risk of future uncollected payments. 
  • Shareholders’ equity: As credit losses reduce net income, retained earnings also decline. This weakens the company’s equity position, making it less attractive to investors. 

Be smart: Protecting your company from credit losses with credit insurance can prevent these negative impacts. 

 

 

Sample Case Study: ABC Manufacturing 

Let’s explore the impact of a credit loss through the lens of a hypothetical company, ABC Manufacturing. 

Background: ABC Manufacturing supplies industrial equipment to businesses around the world. One of their major clients, XYZ Corp, files for bankruptcy and fails to pay a $100,000 invoice. 

Income Statement Impact: 

  • Revenue loss: ABC Manufacturing must write off the $100,000 as a loss. This means that despite the sale, the revenue won’t be realized, reducing their top-line revenue by $100,000. 
  • Bad debt expense: To account for the loss, ABC also records a bad debt expense of $100,000. This increases their operating expenses, further reducing net income. 

Before the credit loss: 

Revenue: $5,000,000 

Expenses: $3,500,000 

Net Income: $1,500,000 

After the credit loss: 

Revenue: $4,900,000 ($100,000 less) 

Expenses: $3,600,000 ($100,000 added) 

Net Income: $1,300,000 

Balance Sheet Impact: 

  • Accounts receivable: Before the credit loss, ABC Manufacturing’s accounts receivable stood at $500,000. After writing off the XYZ Corp invoice, A/R is reduced to $400,000. 
  • Allowance for doubtful accounts: ABC now has a higher allowance for doubtful accounts, reflecting the increased risk of future non-payments. 
  • Shareholders’ equity: With net income reduced by $200,000, retained earnings drop, and shareholders’ equity declines, weakening ABC’s financial position. 

Before the credit loss: 

Accounts Receivable: $500,000 

Shareholders’ Equity: $2,000,000 

After the credit loss: 

Accounts Receivable: $400,000 

Shareholders’ Equity: $1,800,000 

 

 

What’s Next 

To mitigate the impact of credit losses, companies should implement proactive measures like credit risk management, trade credit insurance, and regular reviews of clients’ financial health. Go deeper: Consider working with a broker to tailor a credit insurance policy that fits your business needs. 

 

 

Conclusion 

Credit losses can quickly undermine a company’s financial health, affecting both the income statement and balance sheet. The bottom line: By understanding the financial impact and taking preventive measures, businesses can safeguard their profitability and maintain strong financial stability. 

 

 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.

The Ins and Outs of Export Credit Insurance

The Ins and Outs of Export Credit Insurance

 
 
Navigating international markets is exciting but fraught with risks, especially when it comes to getting paid. Export credit insurance (ECI) is the solution that can safeguard your business from the uncertainties of global trade, ensuring your receivables are protected even when buyers can’t pay. At Securitas Global Risk Solutions, we help companies harness the power of export credit insurance to grow confidently.

 

 

 

 

What is Export Credit Insurance?

Export credit insurance is designed to protect exporters from the risk of non-payment by foreign buyers. Whether the default is due to buyer insolvency, political instability, or economic changes, ECI ensures that your business is financially secure. This safety net not only protects your cash flow but also opens doors to new markets with reduced risk.

 

 

 

 

Why Do You Need Export Credit Insurance?

 

Protection Against Non-Payment

    • Risk: When dealing with international buyers, you’re exposed to risks like political upheaval, currency issues, and economic instability.
    • Solution: Export credit insurance mitigates the financial blow if your buyer fails to pay due to any of these risks, allowing you to keep your revenue intact.

Access to New Markets

    • Risk: Expanding into unfamiliar international markets often comes with higher credit risk due to limited information on potential buyers.
    • Solution: With ECI, you can confidently extend credit to new overseas customers, knowing that your transactions are insured.

Maintaining Cash Flow Stability

    • Risk: Late payments or non-payments from international buyers can severely impact your cash flow, putting your operations at risk.
    • Solution: ECI ensures that your cash flow remains stable even in the face of payment delays or defaults, providing financial continuity for your business.

Strengthening Your Competitive Position

    • Risk: Offering extended credit terms without protection increases your exposure to payment risks, limiting your ability to compete globally.
    • Solution: Export credit insurance allows you to offer competitive credit terms to buyers, helping you win more deals while minimizing risk.

 

 

 

 

Key Features of Export Credit Insurance

 

Comprehensive Coverage

    • ECI protects against both commercial and political risks. This includes buyer insolvency, protracted default, and political events like war, expropriation, or currency inconvertibility that prevent payment.

Global Reach

    • Export credit insurance can cover transactions with buyers in a wide range of countries, giving you the flexibility to explore diverse markets and customer bases with confidence.

Customizable Policies

    • At Securitas Global Risk Solutions, we understand that each business is unique. We work with you to create an export credit insurance policy that fits your specific needs, whether you’re targeting high-risk markets or diversifying your international client base.

 

 

 

 

How Export Credit Insurance Supports Business Growth

 

Expanding Sales with Confidence

    • Export credit insurance allows you to pursue new business opportunities in emerging markets without the fear of non-payment. It gives you the confidence to offer credit terms that will attract more buyers, boosting sales while reducing risk.

Improving Access to Financing

    • Banks and lenders are more likely to offer favorable terms to businesses with export credit insurance, as it reduces the lender’s risk. This can give you access to additional working capital to invest in your business.

Minimizing Risk in Volatile Markets

    • Global markets can be unpredictable, especially in regions with political instability or economic challenges. ECI allows you to protect your transactions in high-risk markets, helping you expand globally without jeopardizing your financial health.

Building Stronger Customer Relationships

    • By offering credit terms backed by export credit insurance, you can develop long-term, trust-based relationships with your international customers. This can lead to repeat business and stronger partnerships, even in uncertain economic climates.

 

 

 

 

Choosing the Right Export Credit Insurance

Selecting the right export credit insurance policy depends on your business goals, market focus, and risk tolerance. At Securitas Global Risk Solutions, we guide you through the process of identifying your key risks and developing a tailored policy that offers comprehensive protection for your international sales.
 
 
 
 
 
 
 
 
 
 
 
 
  1. Assess Your Markets: Identify the countries where you face the greatest payment risks, whether from political instability or economic volatility.
  2. Evaluate Buyer Risk: Consider the creditworthiness of your foreign customers and their history of timely payments.
  3. Customize Your Coverage: Work with an expert brokerage like Securitas Global Risk Solutions to develop an ECI policy that aligns with your business needs, ensuring that you’re covered for the most relevant risks.

 

 

 

 

Conclusion

Export credit insurance is essential for any business engaging in international trade. It not only protects you from the uncertainties of global markets but also helps you expand your business confidently. At Securitas Global Risk Solutions, we specialize in creating tailored export credit insurance policies that align with your specific needs and growth ambitions. Reach out to us today to learn how export credit insurance can support your international business ventures.

 

 

 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.

Credit Insurance Vs Letters of Credit: What Gives?

Credit Insurance Vs Letters of Credit: What Gives?

As often discussed in credit management circles, a sale isn’t a sale until the seller receives payment for the goods or services.  How does a seller get paid?  For short term sales, two of the most common forms of payment are a letter of credit or extending credit / open account.  While both accomplish the same objective, there are significant differences between the options.  The letter of is more secure for the seller, because the risk of default has been reduced, but can limit sales.  Extending credit (open account) to the buyer increases the seller’s risk of non-payment, but because it’s advantageous to the buyer, can used as tool to facilitate sales.  What if the seller could extend credit to buyers to generate sales while limiting risk of non-payment?  The solution is credit insurance.  Let’s look at both payment options in more detail.

 

 

What is a Letter of Credit?

A commercial letter of credit is a document sent from the buyer’s bank that guarantees the buyer’s payment to a seller will be received on time and in the correct amount.  If the buyer is unable to make a payment due to the seller, the bank issuing the letter of credit will be required to make payment.  In a volatile global economy, where there a longer transit times, less knowledge of the buyer, there are advantages to selling on L/C.

 

Seller advantages:

  • Buyer is assured payment
  • Terms of the sale are negotiated in the letter of credit document
  • Funds are transferred from the issuing bank to the seller’s bank

While there are advantages to the seller, there are disadvantages to the letter of credit itself and for the buyer.

 

Disadvantages:

  • Seller – It can be challenging to negotiate the key terms
  • Seller – Transactions details can be missed leaving room for error
  • Buyer – Letters of credit can be costly. The buyer bears the brunt of the fees which typically range from 75 bps in developed countries to 150 bps or more in underdeveloped countries
  • Buyer – Letters of credit tie up the buyer’s working capital. The bank will require the buyer to set aside the funds as a condition of issuing the letter of credit.  This either reduces their borrowing capabilities or access to cash.

Letters of credit are an effective payment method assuring the seller is paid for goods or services.  However, the benefits generally accrue to the seller, while there are a number of disadvantages for the buyer.

 

 

What is Credit Insurance?

Credit insurance is an insurance policy that protects the insured (seller) from non-payment.  It allows the seller to extend credit (open account) to the buyer while reducing the risk of not being paid for their products or services.  Credit insurance can be a win-win for both the buyer and seller.

 

Seller advantage:

  • Sell more. Extending credit makes it easier for your customers to buy your products. Financing is critical aspect of any sale.  If your customer can get a better deal which includes credit from your competitor, you are at risk of losing the sale and your customer.
  • Credit insurers are very good at determining credit worthy buyers and credit limit to extend. If they make the wrong credit decision, the insured can file a claim for non-payment.  That’s a huge benefit often overlooked when evaluating credit insurance options.

 

Buyer advantage:

  • Reduced borrowing costs
  • Improved working capital

The following graphically shows impact of the terms of sale on buyer’s willingness to buy:

 

Conclusion 

 Financing is a critical component of any sales transaction.  Ideally, the seller would like to sell on secured basis, but for most cases this isn’t realistic.  Companies are increasingly recognizing that credit insurance is a valuable tool in their overall enterprise risk strategy.  They can extend credit to facilitate sales, and also reduce enterprise risk by protecting one of the largest assets on their balance sheet.   

 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.

How to Use Credit Insurance for Business Development and Sales

How to Use Credit Insurance for Business Development and Sales

Credit insurance, also known as trade credit insurance or accounts receivable insurance, protects businesses from the risk of non-payment by customers. If a customer fails to pay due to insolvency, bankruptcy, or protracted default, credit insurance ensures that your business still gets paid. But beyond protection, credit insurance can be a catalyst for growth. At Securitas Global Risk Solutions, we help companies leverage credit insurance to expand their market reach and secure their cash flow.

 

 

How Credit Insurance Boosts Business Development

 

Expanding into New Markets

  • Opportunity: Breaking into new markets often involves dealing with unfamiliar customers and credit risks.
  • Solution: With credit insurance, you can confidently extend credit to new customers, knowing that your receivables are protected. This opens up opportunities in both domestic and international markets.
  • Impact: Increased sales and market share in new regions without compromising financial security.

 

Enhancing Customer Relationships

  • Opportunity: Offering favorable payment terms can strengthen relationships with key customers.
  • Solution: Credit insurance allows you to offer more competitive payment terms, such as longer credit periods, without increasing your risk exposure.
  • Impact: Improved customer satisfaction, loyalty, and repeat business, leading to higher sales.

 

Supporting Aggressive Growth Strategies

  • Opportunity: Rapid expansion requires bold moves, including taking on higher levels of credit risk.
  • Solution: Credit insurance backs your aggressive growth strategies by covering potential losses from non-payment, giving you the confidence to pursue larger deals and contracts.
  • Impact: Accelerated revenue growth and the ability to scale your business more quickly.

 

Facilitating Access to Financing

  • Opportunity: Expanding businesses often need additional financing to fuel growth.
  • Solution: Credit insurance makes your accounts receivable more secure, which can make it easier to obtain financing from banks and other lenders.
  • Impact: Improved cash flow and access to working capital, enabling you to invest in new opportunities.

 

How Credit Insurance Drives Sales

 

Increasing Sales to Existing Customers

  • Opportunity: Selling more to your current customer base is one of the easiest ways to grow.
  • Solution: Credit insurance allows you to confidently increase credit limits for your existing customers, leading to higher sales volumes.
  • Impact: Maximized revenue from existing relationships, with the security of insured receivables.

 

Winning New Customers

  • Opportunity: Attracting new customers often requires offering attractive credit terms.
  • Solution: With credit insurance, you can extend credit to new customers with confidence, knowing that your potential losses are covered.
  • Impact: Growth in your customer base and increased sales without taking on undue risk.

 

Reducing Bad Debt Reserves

  • Opportunity: Bad debt reserves tie up capital that could be used for growth.
  • Solution: Credit insurance reduces the need for large bad debt reserves, freeing up capital to reinvest in sales and business development initiatives.
  • Impact: More available capital for growth and less financial strain from bad debts.

 

Building a Competitive Advantage

  • Opportunity: In competitive markets, offering superior credit terms can set you apart.
  • Solution: Credit insurance enables you to offer better credit terms than competitors, attracting more customers and securing more sales.
  • Impact: A stronger market position and higher sales through differentiated offerings.

 

Conclusion

Credit insurance is more than just a protective measure—it’s a strategic asset for business development and sales growth. By securing your receivables, you can expand into new markets, offer competitive terms, and pursue aggressive growth strategies with confidence. At Securitas Global Risk Solutions, we specialize in helping businesses harness the full potential of credit insurance to drive success. Contact us today to learn how we can support your growth with tailored credit insurance solutions.

 

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.

Core Components of a Trade Credit Insurance Policy

Core Components of a Trade Credit Insurance Policy

The policy specimen, declarations, endorsements, and buyer credit limits are the main components of a trade credit insurance policy.

Policy Specimen

Policy Specimen is the Insuring Agreement between the Insured and the Insurer and details the requirements of each party. It will include the coverages, requirements of an insured receivable, any exclusions, the claim filing period, and the timeline for claim settlement.

Policy Declarations

The Declaration page includes the policy terms. The terms are often developed based on the application information submitted to the insurer. Key terms include:

  • Sales Basis: If the premium is based on forecasted sales.
  • Premium Rate
  • Insured Retention: Either through deductible or coinsurance.
  • Policy Limits
  • Specific Terms: Related to reporting and claim filing requirements.

General vs. Specific Endorsements

  • General Endorsements: A state requirement is an example of a general endorsement and would be included in all policies.
  • Specific Endorsements: Based on the Insured’s credit and sales procedures. If the insured sells on consignment, the consignment endorsement should be included in the policy endorsements.

Buyer Credit Limit Endorsements

Buyer credit limit endorsements are the established maximum amount of credit that can be extended to individual buyers or groups of buyers, providing a clear framework for credit management.

Detailed Components of Policy Specimen

  • Coverage: Specifies the types of risks covered, such as insolvency of the buyer, protracted default, and political risks, ensuring that businesses are protected against various scenarios that might lead to non-payment.
  • Claim Process: Outlines the procedure for filing a claim, including required documentation and timelines, providing clarity on how to proceed in the event of a loss.
  • Exclusions: Lists specific situations or conditions that are not covered by the policy, setting clear boundaries for what is and isn’t covered.
  • Obligations of the Insured: Specifies the responsibilities of the policyholder, such as credit management practices and reporting requirements, ensuring that both parties understand their roles.
  • Indemnity Period: Defines the time frame within which a claim must be filed following a loss event, ensuring timely processing of claims.
  • Dispute Resolution: Details the process for resolving any disputes that may arise between the insurer and the policyholder, providing a clear path to address disagreements.

Policy Declarations

  • Policy Limits: Define the maximum amount that can be claimed under the policy, helping businesses understand the extent of their financial protection.
  • Deductible/Retention: The amount the policyholder must bear before the insurer pays out, ensuring that the insured retains some level of risk.
  • Premium: The cost of the insurance, usually calculated as a percentage of the insured receivables, which is a crucial factor in determining the overall cost-benefit analysis of the policy.

Understanding these components helps businesses effectively utilize trade credit insurance policies to protect against potential financial losses due to non-payment by buyers.

Disclaimer:

This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies.  It is not meant to supersede any policy requirements.  Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.