LCI-news

Business agility is integral for survival

June 4, 2020 LCI-news, News No comments

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Today’s business environment requires companies to become more agile and adapt to the growing list of challenges brought on by geopolitical and economic issues. Whilst external factors are generally out of company’s control, businesses need to find ways to become more competitive to survive and grow in such a climate. As we have seen, the COVID-19 pandemic and its repercussions have changed industry trends globally, as well as consumer needs and market dynamics, and has forced companies to look inwards and find ways to optimize their systems and procedures.

How can companies become more agile?

Tips and tools to increase agility within an organization

For businesses to become more agile, a shift in thinking is required. Agility means companies regarding innovation, collaboration and forward-thinking as the core pillars. Strategies need to adapt to respond to market dynamics and emergent industry trends and team members should be empowered to take the lead. Here are some tips for companies to become more agile, and navigate through current and imminent challenges:

Change your business approach

Companies that have been in business for decades find it more difficult to adopt new technologies and change the way business is being done. Internal transformation may seem like a far-fetched and strenuous task. However, as global crises have shown, is that even the most lucrative businesses with a huge market share, can become obsolete if they do not adapt to consumer and market needs. Companies should reassess their industry and sector, as well as market presence, and understand what their customers need today and in the near future.

A shift in strategy then follows

Once a company understands the market dynamics and where value can be added, strategies need to shift. To effectively respond to these changes, a company first needs to look inwards at the roles and responsibilities of every department. Can the way business has been carried out be enhanced? Can a product be improved on? Does the service deliver customer value? Can what we offer, be found elsewhere? Once a new strategy is crafted, it needs to be regularly communicated with the team to gear them towards the same direction. Responsiveness and swift decision making capabilities are key for companies to become more agile.

Ensure innovation is a corporate commitment

Responding to a crisis and finding the tools to survive it, is one part of the challenge. The second part is to remain relevant and ahead of the competition. Therefore, innovation and continuous improvement should be at the core of every organization. Companies should set up innovation hubs and allow team members to share their ideas on how products and services can be improved. This step could even entail digitizing one part of your offering, to facilitate and enhance customer relations. Large organizations are teaming up with experts in different fields, to gain the experience and insights of ‘outsiders’ to improve their offering.

Doing more, with less: The 80/20 rule

Being agile means creating a value-driven model, and delivering products, services and solutions that provide the highest return on investment. If a certain offering, service or client profile or is draining your finances and resources, and exposing you to heightened risk, it should be assessed carefully. In some cases, eliminating it may result in higher profitability if strategies properly shift. Referring to the 80/20 rule, derive ways in which the 20% of the work put in, creates 80% of the value.

Find ways in which you could ultimately do more, with less. The stringent approach to cutting costs should apply, even when not in crisis mode. The roles and responsibilities of team members should adapt based on the new strategy laid out, and multidisciplinary teams should be created for expertise to be shared. Team members should also understand their roles within the new setup and have targets to work towards.

Moving forward to become more agile

Becoming agile requires companies to honestly and openly look at their existent framework and offerings, and be open to change. Change should impact both the mindsets and strategies, as well as methodologies to reach new targets. As we have seen, unexpected events can send even the most resilient companies into crisis mode. Therefore, anticipating potential challenges and threats and adapting to them before they emerge, is advisable.

How to manage debt collection, in times of crisis

April 21, 2020 LCI-news, News No comments

In times of crisis, business strategies need to shift, and internal processes need to take on a new direction. With widespread office and business closures across the globe, debt collection and credit management may become even more challenging to carry out.

Whilst public health is predominantly at risk, due to the spread of COVID-19, the global economy is being threatened, due to the extensive measures being taken to contain the virus. Businesses are feeling the impact of the imposed governmental closures, shifting to virtual platforms to continue with operations.

As SME specialists, LCI and LCI Services continually advise companies on how to structure their internal processes, pertaining to debt collection and credit management. However, during the spread of the COVID-19 pandemic, shifting strategies is important. Here are expert tips to support companies in navigating during these difficult times.

The first debt collection strategy for pending sales

During times of crisis, both the buyer and seller are enduring difficult times. It is important to keep that in mind when approaching clients to settle due payments. Clients will be faced with growing challenges to settle their invoices due to a lack of liquidity and can have valid objective reasons about why they cannot pay.

In a period of uncertainty and instability, fostering human connections in business is important. If you find that your customer is unable to meet or comply with existing agreements – talk to them. Approach your customers in a friendly way, and try to understand their situation. If they are unable to pay invoices within the scheduled timeframe, here are tips that you can follow to preserve the business relationship.

If your clients have cash flow difficulties

In the case of pending or ongoing sales, it is important to be more diligent when following up, yet taking into consideration the situation of the market and your respective clients. Try to uncover the situation of your clients and if they are facing cash flow difficulties.

Invoice on time

If you are carrying out your services as per set agreements, or continuing to deliver goods to clients, ensure you invoice on time. Maintain the regular flow and procedures, even if you know clients cannot pay on time.

Extend credit terms

With the impact of the ongoing economic crisis, exasperated by the COVID-19 pandemic, businesses will have an even harder time to pay on time. It is recommended that you adopt a more lenient strategy. This includes extending credit terms and setting new payment cycles that suit both parties. When a new payment arrangement is being devised, check the feasibility of its terms for both parties. Run a credit check on your customers, to gain additional insights on their financial standing.

The second debt collection strategy for new sales

For all new sales orders, companies are advised to adopt a different approach. In general, practicing proactive credit management with regards to new sales is strongly recommended.

Accept cash

Accept cash payments for new orders, in the local currency. For companies operating in Lebanon, allow clients to pay in Lebanese pounds, and agree on a suitable exchange rate for both parties. For clients outside your jurisdiction, accept bank transfers, and check with your bank if you will be able to access the amounts online, as a result of the closures.

Ensure you can meet agreements

If new orders are received during the crisis, ensure you can meet the set agreements before committing to them. It is advisable to have clear and open channels of communication with your customers, to safeguard current and potential business relationships.

In addition, check with your suppliers if they can deliver on time before committing to a delivery order. Discuss payment terms with them to manage expectations, which can include paying in installments.

Additional advice for companies to remain afloat during COVID-19

Manage cash flow by reducing expenses

During difficult times, businesses should work on reducing expenses across all levels. In addition, businesses are advised on hold onto cash reserves, to maintain liquidity within the company. Project cash flow levels over a period of 3 months, 6 months and a year, to provision for continued closures and the respective impact on your business.

Settle debts

If you have pending debts to be paid, ensure they are settled. Mounting debt can severely impact your company’s financial standing, and it could be subject to high interest rates. If you are unable to pay due debt on time, talk to your financial institution or supplier, to negotiate extended payment terms.

Adopt E-invoicing

The spread of COVID-19 has contributed to speeding up the digitization of the economy, particularly in countries that were behind. In addition, due to company closures, courier services have come to a halt. As such, e-invoicing is recommended. However, to ensure company e-invoices are enforceable, include the following:

Buyer and seller name
Invoice number (based on your internal ERP systems)
Company tax ID
Registration numbers of both entities
Detailed description of the services and products being sold, along with unit price of either
Country of origin
Tax rate and amount applicable
Payment terms

Get in touch with LCI and LCI Services’ teams to learn how we can support you with debt collection, credit information and how to grow sales through exports.

An update from LCI & LCI Services on COVID-19

April 7, 2020 LCI-news, News No comments

Dear partners and colleagues,

We hope you are safe and healthy.

As the global pandemic, COVID-19, continues to spread, sending countries and businesses into a state of panic, we realize that we do not have a frame of reference, to help us navigate. When we look back at previous economic crises and compare them to the current situation, we find that we are operating in a period of complete uncertainty.

Whilst we cannot provision for what is to come, we can act fast, as individuals and businesses, to contain the spread of the disease and the exponential impact it is having on our respective companies.

As insurers, identifying market risks and working on strategies to mitigate them, is built into our DNA. Global transformations have exposed our companies to risks throughout the years. But this is the first time, as insurers, partners, reinsurers and clients, that we are all working to navigate through the same type of crisis on a global scale.

In this regard, we would like to share with you what we have done as a company, to safeguard our teams and business and our diverse client portfolio. We hope this action plan may provide you with valuable insights, and make you feel that we are all operating as one, at this stage.

On a company level

To ensure the safety and health of our teams, we have been operating remotely for the past 2 weeks. Our team members have been empowered and counseled to be able to work effectively from their homes. This move contributes to the containment of the disease, and protects the potential spread of the virus.

However, seeing that we are in a client servicing industry, we put into place stringent business continuity plans and optimized lines of communication, to continue to carry our business as usual. All meetings have been shifted to online platforms and our team is on high alert, to respond to any requests, queries and provide support to clients, partners and reinsurers.

As a result of these two actions, as well as the shared crisis, we find that the team synergy has greatly increased, and each team member understands the vital role each of them plays, to keep the company afloat and delivering on its responsibilities.

On a national level

LCI as a trade credit insurance company and LCI Services as an expert servicing arm in credit management, have a national responsibility. In this regard, we have taken it upon ourselves, in coordination with the Lebanese government and Association des Compagnies d’Assurances au Liban (ACAL), to contribute to combating the spread of COVID-19, by donating to a relief fund. The funds that have been pooled in by various insurance companies, will ensure that COVID-19 testing is covered and the respiratory care needed for urgent cases is provided to all.

Adapt, showcase agility

In these trying times, we are here to support you. Our teams are continually exploring ideas on how to become more agile and adapt our business models to overcome the current crisis, as we believe the world will certainly not be the same after this global crisis. The sharing of information, best practices and tools to help us all overcome difficult period, is a shared responsibility and we look forward to hearing about your experiences.

On this note, we hope that you stay safe and healthy.

Sincerely,

Karim Nasrallah

General Manager, LCI

What can businesses do to navigate in crisis mode?

March 13, 2020 LCI-news, News No comments

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The global impact of COVID-19 is unfolding at an exponential pace, which is greatly impacting the economy. In addition, business activity across all sectors has slowed, and trade has come to a standstill in many markets.

From a business perspective, there are many implications resulting from the spread and panic around COVID-19, which include:

A drop in sales and business activity, with planned targets for Q1, and potentially Q2, being missed by wide margins
Companies are enacting their disaster recovery and business continuity plans, due to forced closure of companies to decrease the potential spread of the virus
Supply chains are being disrupted, especially impacting retail businesses. Servicing and software companies have been able to implement business continuity plans more effectively, to minimize disruptions.
Clients and buyers might not be able to pay on time, which will result in a spike in bad debt that will require extensive debt collection efforts.
Business travel has stopped, and only necessary meetings are being held in small groups, or through virtual conferencing solutions.

Companies are now faced with a growing challenge, which entails maintaining business activity, while managing the impact of the spread of COVID-19. Businesses are taking precautions to safeguard the livelihood of their teams, yet attempt to carry out business as normal, by allowing team members to work remotely.

So what can businesses do in such times?

Companies that are unable to adapt to the growing challenges, will likely not survive the crisis. Therefore, it is integral for companies to act fast and adopt new strategies, to be able to navigate through the current and imminent challenging period.

LCI recommends the following steps:

Move urgent meetings and meetings that required travel, online, or reschedule them for a date in the near future (given the travel bans are lifted).
Maintain close relations with partners and suppliers, to not create further disruptions. Supply chain disruptions are expected, especially for e-commerce / online businesses that have experienced a surge in demand due to the current COVID-19 crisis. Keep both partners and suppliers informed of the latest updates and negotiate better terms where needed.
Implement contingency plans to ensure business disruptions are kept at bay. Whether corporate decisions are taken to close offices and have teams work remotely, or whether they are imposed by government officials, it is important for team members to understand their responsibilities. Immediately put in place clear channels of communication, reporting procedures and ensure all employees can connect to their emails / server. Ongoing internal communication is advised.
Review your company’s cash flow and provision for different scenarios, as the repercussions of the crisis, as well as the climate of uncertainty, are expected to linger. Cutting expenses is important, provided that it does not harm the business.Companies will need to align all aspects of their business, including their operating models, workforce and systems, in order to become more agile. Companies that are the fastest to adapt to the current situation will have a higher chance of survival.
Strategize, work on internal processes and strengthen your online presence. Now is the time to turn inwards and invest time to improve your company, products and services. Review and corporate materials that need revisions. Enhance the SEO ranking of your website and your business listings.
Tailor sales and marketing plans, to adapt to the current situation. Both sales and customer acquisition in such times, are likely to be difficult to achieve. It is recommended that companies firstly provision for a drop in sales, in the forecasts, and work on a detailed plan, to acquire new customers. Understand the psychology of customers during such times and tailor your efforts to cater to them. You could simply send a friendly reminder that you are operational and there to support them.
Identify potential partnerships to scale. Scaling up in uncertain times can be a big challenge. However, partnering with existent innovative companies and tech startups might be the solution. Research the local ecosystem and find any companies that are aligned with your business activities. Then seek to partner with startups that can innovate and test products or services, in collaboration with you.
Lastly, depending on how long the impact of COVID-19 on the economy will prevail, drastic measures pertaining to restructuring might be necessary.

How is COVID-19 impacting trade?

Global shipping has been greatly impacted, and the sector is losing millions of dollars per week, due to forced measures to halt activity and the movement of goods. Trade has exponentially slowed and in some cases come to a halt.

What is the impact of COVID-19 on insurers?

Insurance companies, and particularly, trade credit insurers are feeling the impact of the pandemic outbreak. Global insurers foresee a spike in claims, due to forced cancellations of travel, movement of goods, capital and people, as well as events and orders.

IFRS 9: How will the approach to credit risk change?

October 3, 2019 LCI-news, News No comments

Risks associated with trade credit have taken on a different angle, with the introduction of new standards under IFRS 9.

Various geopolitical, economic and financial risks have prompted international bodies to approach risk appetite and mitigation in a different way. A recent introduction by the International Accounting Standards Board (IASB) pertaining to the International Financial Reporting Standards (IFRS 9), will change the way companies and credit insurers manage credit risk, and how they provision for it.

The key addition is the Expected Credit Loss (ECL) principle, added to ensure that companies and credit insurers integrate vital processes to comply with the ‘expected credit loss impairment principles’.

The key points in IFRS 9

Financial and non-financial organizations take note

A multitude of businesses will be impacted, with regards to the compilation of credit information. Companies will need to enhance credit information systems and procedures to collect data, as part of IFRS 9.
Companies will be required to provision for potential losses based on information and forecasted data. The loss ratios pertain to receivables that are not yet deemed overdue.
Under IFRS 9, additional requirements have been added, to include in the periodical financial statements.
Credit management systems within companies, as well as accounting policies will need to be changed to adapt to the new standards.

Credit risk management will be approached in a different way, in order to safeguard the health of the financial industry. However, a key criticism to IFRS 9 remains the various interpretations of the principles, as stipulated under the standards.

How can credit insurance help?

Credit insurance can help companies waive the impact of provisions under IFRS9 for their receivables.

To learn more how LCI can ensure your company’s trade receivables, support you in shifting to new standards and preparing your company to integrate IFRS 9 standards, do get in touch with our team on: info@lci.com.lb or visit our website: www.lci.com.lb

How SMEs can scale up their businesses

August 29, 2019 LCI-news, News No comments

6 tips to help companies scale up and grow

Small and medium sized enterprises (SMEs) can work on various levels to scale up their businesses, both domestically and in international markets. As SME experts, LCI’s team gathers daily insights, from monitoring over 16,000 companies, and continually identifies key areas of focus, to aid businesses to scale up.

Here are 6 tips to help companies to scale up:

Adopt the digital trends

Every company needs a strong online presence, being the first place customers research a product or service. Developing a user-friendly and attractive website helps to position your company in a positive light. Websites and social media channels can be effectively used to update clients on the latest developments and widen your audience globally through targeting. To effectively use digital mediums, ensure they are up to date and position your brand in a unified manner.

Focus on your strengths

Identify your unique selling proposition and capitalize on it. What strengths does your company have, that others do not? Focus on that in your communication efforts, both online and offline.

Costumer service translates into loyalty

Ensure your customers are well taken care of, from when they are deciding which product or service to purchase, until after transactions are made. By creating a two-way flow of communication, along with add-on services, customers will feel closer to the company and likely repeat purchases.

Identify new opportunities and markets

Whilst expanding into new markets is integral for companies to scale up faster, it comes with many challenges. Before venturing into new markets, research local competition, risks and the market appetite for your product or service. Is there strong demand for what you are offering? Are there cultural norms that you need to adapt to? Know the market well before expanding.

Standardize your processes

When scaling up a business, systems and processes that are standardized will ensure a more seamless experience internally. From financial elements, credit management, to paperwork, systems and delivery processes – develop a system that is followed across all markets, to create a unified experience.

Manage trade receivables and cashflows

Whether selling domestically or internationally, managing your trade receivables and cashflows are integral to scale up. Provisioning for upcoming expenses, whether investments in human resources, marketing or business development, if you have a clear forecast of your receivables, it can ensure a healthier cashflow.

Learn more about how LCI can help you expand to new markets and increase your exports here.

LCI hosts 9th Annual Partners & Reinsurers Meeting

June 24, 2019 LCI-news, News No comments

LCI held its 9th Annual Partners & Reinsurers Meeting in Beirut, on June 20 and 21, in the presence of local, regional and international guests. The meeting shed light on the strategic developments at LCI over the past year, and the plans for growth for the coming years.

Corporate reviews on LCI and LCI Services opened the meetings, followed by a series of presentations from partners, experts and new reinsurers, taking place throughout both days.

As an acting driving force of trade facilitation globally, LCI and its partner network continue to increase the spread of credit insurance on an international level, through joint efforts.

Strengthening partnerships in Egypt

April 2, 2019 LCI-news, News No comments

LCI’s General Manager discusses innovation in trade receivables management

LCI took part in the official conference hosted by GIG Egypt and the Ministry of Trade and Industry in March, 2019. The aim of the conference is to strengthen investment and collaboration opportunities between Egypt and Syria. LCI’s General Manager, Karim Nasrallah, shed light on the innovation in trade receivables management, to drive trade globally.

Digitization will impact the trade industry

March 11, 2019 LCI-news, News No comments

Every day, fleets of huge ships dock in ports over the world and every hour, a plane carrying cargo lands, in one country or another. With every docking and landing, a stack of paperwork will need to be processed. Whilst this practice has been the standard process adopted by governments and countries for decades, the cost of processing trade documents still remains high.

Based on figures released by the World Economic Forum, the cost of processing the paperwork for shipped goods, can reach as much as one fifth of the cost of shipping the actual goods. Many institutions, including banks and technology companies, are trying to streamline this process, as the benefits are numerous. Experts indicate that simplifying the administrative procedures can actually lead to notable growth in international trade.

Apps, technological innovation & block chain solutions are simplifying procedures of shipping goods.

In comes digitization, which is already underway in the trade sector. Apps, projects, technological innovation and even block chain solutions are simplifying the once complex administrative procedures of shipping goods. Electronic-based documentation lowers costs, simplifies workflow, and takes up less time in terms of analysis and storing. Depending on the electronic documents along with the use of standardized ID numbers for transactions, traders can benefit from a smoother process, expand to new markets and deal with new clients, with less requirements when it comes to due diligence, collecting and tracking credit, performance and commercial dispute data.

The advantages of digitizing the trade sector are clear, but will governments and private institutions move fast enough?

LCI Expands its Debt Collection Services to 11 New Markets in Africa

June 30, 2018 LCI-news No comments

The servicing arm of the Lebanese Credit Insurer (LCI), LCI Services, has expanded its Debt Collection Services to cover 11 new African markets, which include Mauritania, Senegal, Gambia, Guinea Bissau, Guinea, Liberia, Ivory Cost, Ghana, Togo, Benin, Nigeria, Cameroon, Gabon, Congo, Democratic Republic of the Congo, Angola, Madagascar, Tanzania, Kenya and Sudan, in addition to existing markets which it covers.

“Businesses operating in the Middle East and Africa face recurrent difficulties in securing payments for the goods and services they supply. It is widely known that these regions achieve inadequate rankings when it comes to debt collection, and many businesses are suffering when writing off bad debt,” shared Karim Nasrallah, General Manager of LCI. “With our expanded reach of debt collection services, we are supporting clients in their regional growth, and protecting their biggest asset – their trade receivables. The addition of these new markets will allow LCI to extend credit insurance cover in these markets in Africa,” he added.

Delays in payments are mainly due to lack of a proper payment behavior framework and a lenient payment culture in these markets, which leads to buyers defaulting and extending supplier credit limits for over 180 days. Debt collection is key for companies to recover outstanding balances. The Debt Collection Services offered include: recovery management, verbal negotiations, dunning letters, final demands, solicitor’s letters, drawing up repayment plans and legal action.