Engineering a Secure Future

After experiencing rapid business growth, Innovation First, a leader in robotics, found itself with unpaid invoices.




Mitigate trade credit risk

Policy Benefit:

Resiliency in a post Covid-19 world

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.

Innovation First’s partnership with Allianz Trade helps it navigate the ongoing challenges spurred by the Covid-19 pandemic. Part of the company’s story is all too familiar: some of its clients struggled during the pandemic, failed to pay invoices, and ultimately had to close up shop.

In these situations, Allianz Trade serves as a backstop to Innovation First’s already robust in-house collections effort. “We try very hard in-house to collect and sustain viable relationships,” says Meador. “But when we need to utilize Allianz Trade, we are so grateful that it is there.”

After exhausting all other options, Innovation First has filed three claims, all for long-term, loyal customers that were forced out of business and couldn’t pay their bills due to the pandemic. “Once we filed the claims, Allianz Trade did its due diligence. It did everything it could on its side,” says Meador. “We simply handed it over, and we received most of our money back.”

“If I needed to file another claim today,” says Meador, “I know Allianz Trade would provide information and stability, and the process would be very smooth.”

At the same time, trade credit insurance allows Innovation First to support school systems that face their own unique challenges, as most of their budgets do not allow payment until full orders are received. This is an acute problem when the world faces ongoing supply chain issues, for STEM competitions are funded through grants, which are then lost when products don’t show up on time.

“We have a pressure that you won’t have in a regular retail lane,” says Harris.

Innovation First has made it a priority to do everything it can to get schools the items they need for competition, even if it means sacrificing the bottom line. Trade credit insurance provides Innovation First with enough financial security and peace of mind to do this, offering breathing room for delayed payments and cashflow protection.

In other words, Innovation First can use the stability that trade credit insurance provides to help its clients in need, preserve relationships, and keep kids building robots.

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.” 

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