Customer Credit Protection

Risk Management Solutions for Management Teams

Sand River can assist oil and gas and oilfield services firms by arranging for protection against risk of customer bankruptcy

Scenario

Your company supplies products or services to an important customer, but you are concerned that the customer is as risk of filing for bankruptcy or liquidating

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Risk

Your customer’s outstanding accounts receivable balance with your company is significant enough to endanger your own cash flow and/or liquidity

Solution

Sand River arranges for you to purchase an option, which you would exercise in the event of your customer’s bankruptcy or liquidation, to sell your customer’s receivables for a specified period of time (i.e. 1 year)

If your customer files for bankruptcy or liquidates...


If your customer files for bankruptcy or begins to liquidate during the option period, the option counterparty from which you purchased protection will cover 100% of your protected accounts receivable and the option counterparty will assume the risk of collecting on those accounts receivable during the bankruptcy process

If your customer continues to pay...



Your company continues to service and supply your customer while collecting payment on outstanding accounts receivables and your only downside is the price paid for the option

The advantages of purchasing put options for your customers’ accounts receivable can be significant

Flexibility

 

  • Available for almost any public company and many private companies
  • Available by customer, as determined by you
  • Unlike factoring, there is no requirement to cover your entire customer base, which in unnecessary and can be prohibitively expensive
  • Available pre-bankruptcy and during bankruptcy

Indicative Terms

 

  • Range of terms available based on your preferences, including expiration date, amount
  • Effective immediately on all outstanding accounts receivable of your customer (not just new receivables after option is purchased)
  • No deductibles or surcharges
  • No customer credit monitoring required from you