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Sub-supplier found room under the credit limit

The Danish company Automatic Syd obtained a working capital guarantee from EKF in less than 24 hours. This reduced the bank´s risk related to an advance payment guarantee worth almost DKK 2.5 million and secured plenty of room for an order boom.
What
Sub-supply of electric switchboards for a foreign power plant
How much
The sub-contract accounts for several million of the total project
EKF's role
EKF provides security for 80 per cent of a bank guarantee covering the customer´s advance payment
EKF product
Working Capital Guarantee
When
2011
  • Quote

    We wanted to be sure that we could take in new orders without hitting the bank´s credit limit

    René K. Johannsen, Managing Director, Automatic Syd
    ​The company Automatic Syd is one of the leading manufacturers in Denmark of electric switchboards  and robot solutions for the industry. The company delivers customised solutions both as a direct supplier and as a sub-supplier to other companies´ projects.

    In the spring of 2011 Automatic Syd won a major order as a sub-supplier to a customer who builts power plants worldwide. The order involved the delivery of a complete system of electric switchboards for a foreign power plant.

    Automatic Syd would receive an advance payment of approximately DKK 2.5 million from the customer against a bank guarantee covering the amount.

    Automatic Syd decided to find out if they could  obtain some additional security for the bank guarantee. ”We were facing an order boom after the financial crisis and wanted to be sure that we could take in new orders without hitting the bank´s credit limit,” says René K. Johannsen, Managing Director of Automatic Syd.
  • ​​It was René K.  Johannsen who called  EKF on a Thursday in June 2011. After having talked to the SME department it became evident that the best solution would be if EKF could provide security for the bank guarantee.
     
    Therefore, on Thursday afternoon at 14.58 René K. Johannsen forwarded an e-mail to EKF including an annual report and further essential information so that EKF could help to work out the figures.
    ​The mail reply arrived on Friday morning at 09.07 : Automatic Syd fulfilled the conditions.
    EKF therefore made a commitment to provide security for the bank guarantee.

    Automatic Syds´ bank could subsequently issue a guarantee even without further approval of the working capital guarantee by EKF because  guarantees below DKK 5 million can be issued online by the banks themselves through EKF´s online systems.
  • Less than a week after the telephone conversation with EKF, Automatic Syd´s bank issued the guarantee. The repayment period of the guarantee was three months, and by issueing a working capital guarantee EKF thereby assumed 80 per cent of the bank´s risk.

    The legal and financial frameworks are now in place allowing Automatic Syd to get its advance payment and start the delivery of an important order to the foreign power plant.
    ​”EKF’s help has no doubt fired up the process and I was impressed by how fast EKF could approve a working capital guarantee”, says René K.  Johannsen, Managing Director, Automatic Syd.
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