How BRF leverages trade credit insurance for growth

BRF and Allianz Trade for Multinationals, our team dedicated to corporates and financial institutions operating globally, have established a true partnership, which – with the support of the broker ICBA – has helped BRF leverage  trade credit insurance for growth.

BRF, one of the world’s largest poultry exporters, is present in over 127 countries and owns iconic brands, such as Sadia, Perdix, Hilal, Banvit and Qualy. Its production facilities are spread across 10 states, with 35 manufacturing plants located in Brazil, in addition to another 6 plants abroad. 

BRF’s purpose is to offer increasingly tastier, practical, good-quality food to people around the world, through the sustainable management of a vivid, long, and complex chain that provides everyone with a better life, from farm to table. Based on the fundamental commitments of safety, quality and integrity, its strategy is based on a long-term vision and is designed to generate value for its 90,000 employees, more than 300,000 clients, and millions of consumers.

In the Middle East and Turkey, BRF owns 5 factories, including the biggest processing factory in the region, located in Abu Dhabi - UAE, in addition to 30 distribution centers, commercial offices and Halal Innovation Center. It operates following a “farm to table” approach with a fully integrated value chain, offering a wide range of quality products, comprising whole chicken, chicken parts, ready to prepare products, frozen vegetables, and fries. 

In the GCC, its main brand Sadia occupies the leadership position in the chicken category and is recognized as the most preferred brand, a true testimonial of its legacy in the region.  

In August 2023, BRF announced the creation of a joint venture (JV) with Halal Products Development Company (HPDC), a subsidiary of Saudi Arabia’s Public Investment Fund (PIF). The main goal of the JV will be to further develop the halal industry in the region through the establishment of a Halal Business Headquarter, a Halal Food Innovation Center and a Center of Excellence.

When Bruno Massera – now International CFO at BRF – took over as this unit’s Head of Finance in 2017, he was facing considerable challenges in terms of accounts receivable management. It was through re-engineering BRF’s existing partnership with Allianz Trade that clarity and solutions were found. 

At this time, BRF’s largest international operation was in the Middle East, and the company was keen to advance the value chain. But when Bruno came to the helm, he discovered that a complex situation existed between BRF, Allianz Trade and BRF’s trade credit insurance brokers at the time.

He found that credit insurance was not being leveraged properly: there were over 100 Non-Payment Notifications (NPNs) pending, with overdue claims at 7%, resulting from a clear information gap from all sides in terms of key compliance points and processes, and BRF was understaffed in this area.

“The trade credit insurance situation I inherited was complex and challenging,” explains Bruno. “I spent my first two years in post ‘cleaning house’ and building a new way of working. I doubled my team from two to four people, and restructured the organisation. I also assigned a specific person to work 100% on claims and completely dedicated to trade credit insurance. Another team member was assigned to develop the NPN (Non-Payment Notification) processes in order to stay up-to-date.”

Bruno knew that even more far-reaching changes were needed to make the most of trade credit insurance and form more profitable business partnerships. He was also fully aware of the value that the right relationships could bring in terms of accelerating change.

He started by reviewing BRF’s trade credit insurance. One of his first moves was to appoint a proactive broker: Danielle Cousins of ICBA UK (known locally as EFCIS). A specialist trade credit insurance broker present in over 75 countries, ICBA was able to streamline the relationships between all three parties and provide better customer relationship management, which was missed by BRF previously.

With the new broker in place, BRF and Allianz Trade for Multinationals were able to connect at enhanced levels. Our Allianz Trade for Multinationals team, which handles large, multinational accounts and had worked with BRF for over 10 years welcomed this new, more focused relationship and was keen to help BRF take full advantage of its trade credit insurance program, by working with ICBA on enriching their internal processes and improving the way of working together.

Anil Berry, Allianz Trade for Multinationals CEO at the time (and current Board Member, Commercial) and Danielle engaged in a transparent dialogue in order to find the best solution for BRF. Together with newly appointed Allianz Trade for Multinationals Account Manager at the time (and current Head of Grading Automotive), Rosa Hornung, Bruno was able to better organise his team and get a much clearer picture of how to properly implement, manage and leverage trade credit insurance. BRF’s new vision for a well-managed, efficient platform for growth was created through a true partnership between BRF and us, facilitated and managed by ICBA. “We offered BRF greater clarity and were able to engage on a management level, as we know our client very well,” explains Anil.

In collaboration with us and ICBA, Bruno then embarked upon an in-depth review of the company’s internal NPN processes, systems and policies, coupled with the requirements of their insurance program. Both parties offered Bruno’s team training to ensure that processes were compliant and appropriate and that the right checks were implemented. BRF’s processes were completely re-engineered with ICBA and our expert support.

“Trade credit insurance can be an exceptional platform for growth if used correctly and within the context of a true partnership,” says ICBA’s Danielle. “It offers a backstop which can give companies the confidence to grow in new markets. Trade credit insurance must however be reviewed and managed constantly. With unique tools and proprietary systems, such as our Analysis of Risk and Compliance platform, we can do this in a very effective way. In-depth training on how to get the most out of a policy is also essential for the policyholder, as are the right documentation and processes. But the most important criteria for success is having the right people in place on all three sides.”

The Middle East is a difficult region in terms of accessing information and assessing a company’s risk, since businesses in the area are under no obligation to publish financial statements. But thanks to its close relationship with our local team, as well as ICBA Dubai (known in the Middle East as Malakut), BRF was able to leverage the privileged position and data offered by our global portfolio of clients. Because customers have to inform us about payment defaults, we hold extensive market knowledge and information on the financial health of companies worldwide. This close collaboration based on transparently shared information became the cornerstone of BRF’s successful transition.

Over the last seven years, BRF has learned that you cannot outsource your credit decisions. “Trade credit insurance is a solution that can help mitigate risks but cannot replace strong internal credit controls,” says Bruno. “It’s crucial to know that trade credit insurance is there if things go wrong, but internally, we try to operate as though we don’t have that cushion. We still assign credit limits and work with underwriters when we cannot reach our clients,” he explains.

That said, Bruno and his team are categorical about the advantages of working with trade credit insurance and with Allianz Trade for Multinationals in particular.

“The key to this hugely successful shift in processes and the results they have produced has been the fact that all parties involved have taken the time to build close, trusting relationships in the knowledge that we are all committed to working transparently. We are delighted with our experience of the process and the results we have seen,” adds Bruno.