The Covid-19 Construction Crunch: Are we prepared for what’s next?

Construction companies have reported the negative impact of the Covid 19 pandemic in a survey conducted on members of The Associated General Contractors (AGC) of America.

Of the 909 respondents in the survey, 28% stated that they have been asked to halt or delay working on projects that are currently active or supposed to start in the next 30 days. For projects which are supposed to start more than 30 days from the survey, 11% of respondents have been told that these will be delayed or halted. Major reasons cited for project delays or disruptions were a shortage of workers, including from subcontractors, as well as a shortage or materials and equipment. In fact, 22% of respondents were informed by their suppliers of delays or cancellations in deliveries.

While the survey was conducted in the US, Philippine contractors are most likely in a very similar plight. This is not surprising, given the contraction comes from both the demand and supply side. From the supply side, construction companies could face shortage both in workers, materials, and equipment as the quarantine creates logistical challenges for people and goods. Likewise, demand for private construction could constrict alongside the drop in tourism and commercial activities.

The next considerations then for those in the industry have to do with how well protected they are against force majeure. What happens when they cannot fulfill their contracts on time? How about if they are leveraged or have existing loans? Will companies who supply to contractors also be affected? Lastly, how could they protect themselves?


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3 Insurance Products We Need to Know as the Corona Virus Spreads

by Maureen Ledesma

The corona virus has put a strain in the global economy in the past 2 months. Offices have postponed meetings and events, governments have considered lock downs, tissue paper is running out!.

But what does this mean for you?

If you’re in the tissue paper and disinfectant industry, you are doing more than well. But if you’re in the events, travel and tourism industry, you are also down with the “slow-to-no-business” virus.

Aside from travel insurance that can refund your cancelled flight, what can other types of insurance do (have done) for you?

  •  Events and travel companies should have purchased comprehensive event insurance to refund disgruntled guests. This is to retain customer loyalty and brand reputation.
  • For businesses trading with countries badly hit by the virus, say for example you’re a local producer of plastic supplies for machines in Italy, your #1 concern is if that company in Italy can still pay you on time, or if they can pay at all. In this case, trade credit insurance will be your best friend, to help you confidently continue business with foreign counterparts. If the Italian company can’t pay or went bankrupt, insurers got your back.
  • If you’re a government, you can subscribe to the World Bank’s Pandemic Emergency Financing Facility (insurance linked securities) so it can provide your country or region with the needed liquidity and capital to help you in your response and recovery.

Do you feel bad for learning about these just now? It’s okay. It’s better late than never.  You’ll never know when epidemics like this hit, (And we’re sure this COVID-19 isn’t the last one) so having due protection is important. 

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5 Best Habits of Competitive Businesses to Manage Credit

From timely payment due date reminders to trade credit insurance, here are the top five credit management tools for competitive business owners in the Philippines.

by Randolf Santos

An international study of 1,500 business owners revealed that most companies are slowly deviating away from Net 30 payments. Some of them have required one-week payment terms to reduce the chances of default, but one-week payment terms can be too short for some customers and can make you lose the client. Here are five credit management tools that business owners in the Philippines can use and not worry about straining their relationships with clients:

Automate Payment Reminders

An invoice with a three- or four-week payment due date becomes settled within a month, according to the study. An automated system for polite payment reminders should be helpful, but contemplate carefully about the frequency of reminders. You don’t want to appear pushy. Strike a balance by sending a reminder a few days before the payment deadline. Be ready to call the client if the invoice stays unsettled after a week from the due date.

Offer More Payment Options

Multiple channels make it more convenient for clients to settle outstanding invoices, which then require you to offer more payment options. Cash arguably remains the best payment method for business owners. Some of your clients, however, may refuse to carry large amounts of money. You don’t necessarily need to start accepting credit cards, which can affect your profit margin anyway.

An alternative involves opening an account from a bank that has several branches nearby your clients’ offices. You can also include cheque pick-up service, bank transfer and online payment options. Be sure to list all the possible payment methods in the invoice.

Update Receivables Aging Summaries

Competitive businesses, particularly in the import and export, manufacturing and retail sectors, use accounts receivable aging summaries. This document simply records each unpaid invoice and unused credit memo per client. It’s a nifty tool to track overdue payments but only if you regularly update it.

The ideal practice for updating receivables aging summaries should occur after payment has been made, although monthly updates to the report are acceptable too. The overdue ratio, which is the overdue amount divided by the total amount of receivables, should be between 0% and 5%.

Set a Limit for Buyers

Business owners should ask for their clients’ audited financial statements whenever possible. You can determine a credit limit based on the status of their cash flow, hence minimizing the risk of default due to delinquent or unpaid invoices. Late payment fees are possible as well, but you should explicitly inform buyers about additional charges in your invoice. A signed agreement before providing services or supplying products remains a good precaution.

Get Trade Credit Insurance Coverage

Insurance may be the best thing to cover your losses from unpaid invoices. Never discuss the terms of your policy to your buyers, whether or not they are curious about acquiring insurance for their own business. How long should you wait before filing a claim? Depending on your insurance policy, it can range from thirty to sixty days of non-payment after the due date seems an acceptable period to list the invoice as a loss.

Remember that you should have exercised every legally possible way to collect payment before contacting your insurer. Register on Vesl’s platform to know more about how business owners find the right insurance provider for them.


Unpaid invoices will continue to be a part of doing business with buyers, but this reality shouldn’t stop you from reducing your risk exposure. Credit checks on potential clients can complement these five management tools to avoid dealing with delinquent customers. Contact us today to find out more about our platform.

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Top 4 High-Profile Corporate Insolvencies in the PH

There’s an unnecessary sense of confidence that big companies are unlikely to become insolvent. Historical accounts serve as the best examples. Here are four of the high-profile corporate insolvencies in the Philippines.

by Randolf Santos

Corporate insolvencies still elicit discomfort among Filipino businessmen, especially for those who suffered significant losses from their investments. An insolvent business simply means that investors somehow feel that it’s their fault for being unprepared, and nobody likes to admit that they failed to foresee the unexpected.

Business owners should acknowledge that while insolvencies remain taboo in the corporate world, it can happen to any kind of company. There’s an unnecessary sense of confidence that big companies are unlikely to become insolvent. Historical accounts serve as the best examples. Here are four of the high-profile corporate insolvencies in the country:

ASB Group of Companies

The group of energy and petrochemical companies filed a petition for rehabilitation with the Securities and Exchange Commission (SEC) in May 2000. The SEC Hearing Panel granted a 60-day suspension of payments shortly after ASB Group filed the petition, due to the inability of paying their obligations within one year. This allowed the company to become technically insolvent and qualified for rehabilitation based on SEC rules.

ASB Group had P5.38 billion of assets at the end of 1999. They owed approximately P8 billion to five major banks and 700 unsecured creditors comprising contractors, individuals and suppliers in the Philippines. The SEC approved the company’s rehabilitation plan in 2001. Part of its plans to reduce debt involves the sale of their ongoing projects, payment in kind transactions and real estate divestments.

Uniwide Group

Uniwide became a household name in the late 1980s until the 1990s with their competitive prices for consumer goods. Sari-sari store owners flocked to their shopping malls for this reason. In fact, the company even had to curb foot traffic at their establishments during the peak shopping season in 1988.

The company’s troubles apparently began in 1998 with a poorly managed rehabilitation plan that ultimately led to liquidation several years later. The SEC already described the company as insolvent since 2003. Cash flow seemed to be the initial problem of Uniwide during the late 90s, as suppliers had decided to stop transactions with the company because of non-payment for previously delivered goods.

The situation became worse when creditors began to chase after the retailer. By 2013, the SEC issued a liquidation order after Uniwide’s liabilities exceeded its assets. It also didn’t help that the group already lost its market share to emerging competitors like SM. A court order in 2017 for liquidating Uniwide’s assets seemed like the proverbial nail in the coffin.

Victorias Milling

The company is the biggest sugar manufacturer in the Philippines, but the Asian financial crisis in the late 90s proved to be a bigger force. Victorias Milling sought debt relief in the midst of bankruptcy in 1995. Its dire financial situation can be attributed to the cheaply priced imported sugar, unmaximized production capacity, debt for expansion and repairs.

By 2013, the company bounced back after establishing a creditor-driven program to settle P4.4 billion of restructured debt and redeem issued convertible bonds. Victorias Milling agreed to a 10-year debt settlement in December 2018 to avoid further lawsuits from creditors, who were particularly after the company for roughly P1.2 billion of outstanding loan balances.

Hanjin Heavy Industries Corp-Philippines

Hanjin’s troubles started in 2009 when it lost US$1.1 billion from the global financial crisis, which also incurred US$15 billion of losses to the container shipping industry. In 2010, the Eurozone crisis affected the South Korean company’s trading activity between Asia and Europe. The regional business accounted for almost a quarter of its revenue in the same year. By April 2016, the Korea Development Bank took management control of Hanjin that signaled the severity of the company’s problems.

The embattled shipping company filed for receivership in August 2016 in South Korea, but its impact reached the Philippines due to five local banks that collectively lent US$412 million to the company. The company’s suppliers, however, filed for P48 billion (around US$923 million) of claims in February 2019.


Banks represent the major creditors of these companies that are insolvent or once filed for bankruptcy. If they struggle to collect payments, then it’s hard to imagine the plight of individual creditors and smaller businesses from recovering their losses due to unpaid invoices.

We emphasized the importance of credit management tools in another article, including trade credit insurance. It protects a company’s receivables from non-payment caused by insolvencies or bankruptcies. Vesl is an online platform that gives access to “pay per invoice” trade credit insurance for businesses. 


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As E-commerce Disrupts PH Retail Industry, Suppliers Should Prepare for the Inevitable

Suppliers of traditional retailers in the Philippines should rethink their fallback strategies against client bankruptcies, amid the constantly evolving global e-commerce market.

by Randolf Santos

Online shopping continues to disrupt the brick-and-mortar retail business worldwide, and it already has found its way into Philippine shores.

The e-commerce market in the country will generate more than US$1.4 billion in revenue by 2023 from US$743 million in 2017, based on Statista’s forecast for the industry. The report showed that revenue growth will streak upward in the next four years, hence slowly threatening the stability of business for traditional retailers.

What Contributes to Online Retail’s Growth?

There’s no doubt that Filipinos still love to shop at malls despite the advent of e-commerce websites such as Lazada, Shopee and Zalora. However, the convenience of buying consumer goods without ever having to leave home seems to be the main selling point of online retail. On a technical aspect, the so-called Industry 4.0 will propel growth for the country’s e-commerce market.

The fourth industrial revolution refers to disruptive trends and technologies that also include the Internet of Things and cybersecurity. The Association of Southeast Asian Nations (ASEAN) has begun to review Industry 4.0’s potential impact on the economies of ASEAN countries. For instance, the Regional Comprehensive Economic Partnership identifies e-commerce as an integral part of preparations for the next industrial revolution.

E-commerce Brought Down Retail Titans

Forever 21 Inc and Toys ‘R’ Us comprise some of the big-name global brands that filed for bankruptcies since 2017. Consumer preferences that swung in favor of online retail predominantly caused the companies’ downfall. The famous toy retailer nearly shut down all U.S. stores, while the fashion brand plans to close almost 180 stores in the country. What does this imply for Filipino retailers?

Mixed-use real estate projects that include shopping malls may still be plenty, but will foot traffic remain sustainable over the long term? In the case of Forever 21, the company’s operations in the Philippines will continue because of its business relations with SM Retail Inc. Other traditional retailers don’t have such luxury of partnering with a retail giant. If an established brand succumbs to the competition from e-commerce, then the likelihood of going bankrupt increases for small- or medium-size retailers.

Popular Market Segments for Online Retail

Consumer electronics and media will account for the biggest share of revenue in the e-commerce industry at almost US$258 million in 2019, according to Statista’s analysis. Revenue from fashion sales will amount to nearly US$227 million in the same year. These two segments will be the top two market niches for online retail through 2023, when both submarkets will contribute more than US$650 million in e-commerce revenue.

Suppliers for traditional retailers of electronics and fashion items may have noticed weaker business this year. Trade credit insurance prevents you from second-guessing the outcome of retail trends, even when your company continues to enjoy a steady flow of orders. What would you do if your biggest client fails to pay on time?


It’s never too early to consider how your business can cope with a growing online retail market in the Philippines. Insurance has now become more necessary than ever for suppliers to protect their businesses from the most at-risk customers. VESL connects you with lenders and reputable insurers who can protect and identify the vulnerability of your end-buyers and clients. Register now for free and discover how our pay-per-invoice deals have helped different companies to recover up to 90% of business losses.


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Non-Paying Clients Cause 1 Out of 10 Invoices to Be Delinquent

Trade credit insurance protects small and mid-size businesses in the Philippines against the risk of loan default, which can happen due to delinquent invoices.

by Randolf Santos

Has your business attracted more clients over the last 12 months? While this brings an increase in profit, your risk exposure to unpaid invoices grows at the same time.

Small and mid-sized enterprises (SMEs) in the Philippines often overlook the importance of trade credit insurance to cover unpaid invoices from their clients or end buyers. Some business owners believe that revolving credit lines and bride financing loans already protect them from delinquent receivables. However, most of them fail to analyze the probability of defaulting on their debts because of non-paying customers.

Do You Have Too Many Pending Invoices?

On average, receivables comprise over 40% of SME assets, according to Benel Lagua, Development Bank of the Philippines executive vice-president. Out of these receivables, Lagua claims that one out of 10 usually becomes delinquent. This means that if you trade at 10% margin you have to sell 10 times more the value of your delinquent invoice just to make up for the loss.

Aside from non-payment, you have to think of the possibility of delayed liquidation of receivables which is also detrimental to your business. If you financed your invoice, your lender may have already imposed late payment fees for your inability to settle your short-term debt on time.

With these risks in mind, it is important to find ways to secure your receivables. These include selling your invoice via factoring entities, creating a liquid account solely for bad debt reserves, and trade credit insurance.

What Are the Benefits?

Trade credit insurance coverage for businesses guarantees payment of up to 90% of delinquent invoices. Your receivables become delinquent or unpaid when your clients file for bankruptcy or insolvency.It also protects you against protracted default or delayed payment, which manifests when a client can’t settle their financial obligations within six months from the original payment due date. These commercial risks are especially high when there is global recession or even industry developments that certain firms cannot adopt to

Aside from commercial risk, trade credit insured businesses also reduce their exposure to political risks that are beyond their clients’ control, such as terrorism or war, hence affecting their capacity to pay on time.

You can choose between export credit insurance and domestic credit insurance. The latter refers to coverage for businesses that only cater to buyers in the Philippines. Companies with overseas buyers and clients should consider adding export credit coverage to their insurance policies.

Which Companies Need Insurance?

Businesses in the construction, exporting, manufacturing and trading industries usually offer payment terms to their clients, and will therefore benefit from protection against buyer payment default. This does not only apply to local buyers, but especially to foreign ones. In fact, the effect of a payment default from a foreign client may be larger, given the difficulty of collecting payments offshore.

In the U.K., government data showed that several companies already declared insolvency in the second quarter of 2019, due to the growing political and commercial uncertainty from Brexit. With a 12% increase in the same period, the level of insolvencies has reached the highest since 2014.

SMEs in the Philippines should also look out for signs of growing political tension because of the U.S. and China trade war, and the Hong Kong recession, largely because of ongoing protest movements in the autonomous region.

How Much Does Insurance Cost?

Trade credit insurance in the country remains largely unused, especially by small businesses, despite a continually changing financial system. Luckily for SMEs, it’s now easier to find a trade credit insurer through online platforms. One of these, financial technology companies,Vesl, gives SMEs access to trade credit insurance paid on a per invoice basis, making it practical and affordable.

The actual cost of insurance depends on your buyer’s risk, with additional fees to have your buyers assessed. You can register on Vesl’s platform for free to start the process.


Trade credit insurance coverage may not recover 100% of your unpaid invoices, as it is a mitigation tool to recover some loss rather than losing everything. Insurance coverage not only prevents you from experiencing a slimmer profit margin. It also ensures that your creditworthiness for small business loans doesn’t take a negative hit. If you constantly engage in net 30, 60 or 90 payment terms, your risk exposure to defaulting buyers remains high even when you successfully expanded your customer base over the past year.


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Is Your Buyer Asking for Better Payment Terms?

Here are 5 Things you MUST know about your buyers before you do that.

Firstly, what are payment terms?

These are the terms that you, as seller, set to communicate to your clients when you would be expecting their payment. These terms are usually found on the contract and on the invoices relating to that contract.

Common invoice payment terms:

CODCash on Delivery
PIA/CIAPayment in Advance/Cash in Advance
Net 7Payment after seven days of invoice date
Net 10Payment after ten days of invoice date
Net 30 Payment after thirty days of invoice date
Net 60 Payment after sixty days of invoice date
Net 90 Payment after ninety days of invoice date
EOMEnd of Month
Letter of Credit A documentary credit confirmed by a bank, often used for export

Providing better payment terms is a sign of having good faith to your buyer. It’s actually sometimes called giving credit terms because essentially, you’re providing credit to your buyers – to pay later. You’ll find that sellers who do this tend to be aggressive in closing deals. Giving better payment terms is good if you are poising your business to grow.

So, if a new buyer asks for better terms, before jumping in to say yes (or no) right away, you need to first conduct proper buyer due diligence. You can do this by purchasing a credit report from a credit reporting agency or you can do it yourself.

Here’s how you do it yourself – the least you can do

5 things you should ask for from your buyer before giving payment terms.

1. Basic info: Name, address
2. Legal status: Date of establishment, identification number
3. Business activity description: distributor, wholesaler, etc.
4. Trade references: commercial morality (are they involved in any past litigations?), payment history, and agency credit scores if available
5. Financial condition: past and current financial records

There’s nothing wrong erring on the safe side.

Chances are, when you’re applying for trade credit insurance or trade financing for your transactions, the information above would be the same data insurers and lenders would ask about your buyer. Availability of these data can smoothen your applications too.

Disclaimer: The views and opinions expressed by the author does not necessarily reflect the official policy or position of Vesl Pte Ltd. Should you wish to contact the author of the blog, you may do so by contacting her here.

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The Untold Story of International SMEs: An Entrepreneur’s Perspective

Ambitious and cautious, Green Mint Pte Ltd is an international trading business what has grown in folds over just a few years thanks to its founder’s ability to seize opportunities and try out new things.

by Maureen Ledesma

This blog focuses on Green Mint’s founder and CEO, Vaibhav Gupta, who shares his inspirations, struggles, and vision for his company.

Know Your Heart’s Desire

According to Vaibhav, when he was still in college, he had a vision that he will start a business as he doesn’t find himself suitable for a regular job. He’d get bored and would want to make more money than being an employee. However, he understood early on that he needs to learn how everything in business works, and he knows it won’t be easy.

“After college I gained experience from various business houses and learned the importance of purchasing and financing.”

In 2012, three years after college, Vaibhav opened up Green Mint which is a company trading various metals.

“I started making money and I realized the potential of what I’m doing. If I add volume to my trades, I’ll definitely make more money.”

According to Vaibhav, he would not be here without his business partner whom he also considers his mentor. Vaibhav took over Green Mint upon the retirement of his partner in 2016. In addition, Vaibhav recognizes the support of his wife and his family in developing this business.

The Struggle is Real

We asked Vaibhav on his biggest challenges in starting and growing Green Mint. According to Mr Gupta, their biggest challenge when starting was maintaining cash flows and finding the right banking partners who can then later provide lower cost of funds.

“Biggest challenge for us is to obtain fund at a lower cost. Big players in the market have low cost funds and had done vertical integration, whereas players like us have high cost of funds. Finding capital for vertical integration is a big task.”

Be Brave to Try New Things

Vaibhav’s go getter nature to take advantage of opportunities and his courage to try new things in trade finance rewarded him and helped him grow his business. One of Vaibhav’s buyers wanted open account payment terms, 60 90 120 days. He was hesitant to offer payment terms but, since it’s good business, he looked around for solutions to minimize his risks.

“One of my buyers told me that we can have trade credit insurance on them so I’m comfortable to provide a credit period. When I was searching for credit insurance, I found Vesl. Main distinguishing factor between others and Vesl was that Vesl was providing per invoice-based insurance through their platform which was very cost effective in comparison to other players who take lump sum amount for providing trade credit insurance.”

Vaibhav successfully covered his invoices by accessing the Vesl platform and was matched to a lender who would finance his receivables. Not only did Vaibhav have peace of mind dealing with a buyer asking for payment terms, he also found new lending partners who can grow his credit limits. Now Vaibhav banks with one of the biggest Indian Commercial Banks at a lower cost of funds, thanks to trade credit insurance.

Don’t be Complacent, You’re Limitless!

Green Mint as a Company started with copper scrap, and later moved to nickel and steel. Nowadays they are processing and selling ingots. They have expanded and are currently headquartered in Singapore with networks in UAE, Hongkong, China and Africa.

Vaibhav is not stopping with one venture. “In coming years, Green Mint shall be in manufacturing and retail of goods. We are aggressively working in agro retail space.”

Stop Reading Success Stories

According to Vaibhav, to have an edge in starting a business, it is a requirement to have a niche, be focused and have deep knowledge of an industry to know where you can add value.

“There are already big players who have been there longer than you, have integrated far wider than you, and they won’t allow you to eat their share“, Vaibhav said.

“Before jumping into entrepreneurship, keep in mind that the struggle is real. Don’t read success stories. Go to people who failed and learn from them.” He added.

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Hanjin Bankruptcy – More than just the Banks

The corporate bankruptcy of Hanjin Heavy Industries and Construction Philippines recently shook the walls of five major banks in the Philippines, namely Rizal Commercial Banking Corp. (RCBC), Land Bank of the Philippines (LandBank), Metropolitan Bank & Trust Co. (Metrobank), BDO Unibank Inc. (BDO) and Bank of the Philippine Islands (BPI), as reports reveal the shipbuilding company’s USD 412 million loan to these Philippine lenders. Another USD 900 million is reportedly owed to South Korean banks.

However, these banks have downplayed the severity of situation, claiming that their total exposure is bearable when compared to total loans issued. RCBC, the most exposed of these Philippine lenders, disclosed that loans to Hanjin comprise just 1% of their total assets, and less than 2% of their total net loans.

While lenders have Hanjin exposures in tolerable levels, the same may not be the case for the shipbuilder’s suppliers. Based on a Business Mirror report dated Feb. 11, 2019, claims worth PHP 48 billion (approximately USD 923 million) were filed in Olongapo Regional Trial Court as of February 8, 2019. More than half of these claims are from other creditors and suppliers who may not have the same strict risk management protocol as the mentioned banks.

Several questions occurred to our team as we mulled over the potential devastation caused by Hanjin, not just to their lenders or clients, but also to their suppliers – How much share in these suppliers’ revenue does Hanjin contribute? Do they have enough cashflow to cover for losses or delayed payments from the shipbuilder? If not, do they have the means to mitigate these losses?

Failures of large companies may not always cripple the macroeconomy, but stories like these change the dynamics of an industry and create bad ripple effects on smaller companies in the value chain. It is always in our interest to dig deep, find out what could have been done to prevent such crises, and provide solutions that would actually do so. Stay tuned as we explore further how this case has affected other companies in the supply chain.

Related Links
• Claims vs Hanjin at P48B Long Rehab Process seen
• Hanjin Philippines Shipbuilding Bankruptcy
• Exposure to Hanjin Philippines may put local banks ratings under pressure — Fitch
• Clarification of News Article Jan 15 2019 — RCBC
• Debt-equity swap planned for HHIC

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