Engineering a Secure Future

In the beginning, when the company was involved in only STEM education and robotics competitions, there appeared to be little need for trade credit insurance. According to Harris, the company rarely had a loss, the AR department had no bad debt, and the company’s key clients—school systems—always paid their bills in full and on time.

But things started to change as the company grew and diversified into toy design. Suddenly, the toys were being picked up by big box retailers and receivables were growing. Then big retailers started to shutter, and Innovation First suffered its firstever loss—which was significant.

“After the horse was out of the barn, we said, ‘We’d better go with an insurance program,’” said Harris. That’s when Innovation First partnered with Allianz Trade.

Allianz Trade gives Innovation First what Harris calls “sleep-atnight insurance,” but he believes the true benefit is the sense of partnership. Allianz Trade helps Innovation First maintain complex client relationships, navigate recent pandemic-related challenges, and even innovate its internal AR policy.

One unique benefit of partnering with Allianz Trade is that it prompted Innovation First to innovate its own AR department, says Harris. Early in the partnership, Harris says that Innovation First learned a lesson about balancing client relationships, pursuing missing payments, and knowing when to turn things over to Allianz Trade.

“We try to be like a small-town dealer and understand our customer’s problems,” says Harris. “We try everything we can to work with customers to get paid before filing a claim.”

“In one instance, Allianz Trade warned us that there was going to be a time-lapse and we wouldn’t be able to collect the full payment,” says Harris. “After knowing this customer for many years, we believed them when they committed they would pay. Well, they didn’t pay us, time lapsed, and we could only recoup a percentage of the debt.”

In response, Innovation First tweaked some in-house policies so that now the AR department has all the information it needs— including timelines—at its fingertips. “We got very disciplined in AR,” says Harris. “AR personnel knows each customer personally and calls them regularly.”

“Every two weeks, I review the aging reports with the sales team. We have policies in place to track payments and hold customers accountable. Very few invoices get to be 90 days,” adds Meador.

“I think of the Allianz Trade team as part of our in-house AR department,” says Harris. “We exchange information back and forth. Together, we are on top of things quicker. We don’t want Allianz Trade to get hit with a loss. It’s our loss, too.”