Case study - CEL Aerospace Test Equipment Ltd. : Credit insurance for the aerospace sector

How we helped CEL Aerospace Test Equipment Ltd. protect product development costs on a per client basis

At a glance

Company:

CEL Aerospace Test Equipment Ltd.

Trade sector:

Aerospace

Market:

Global

Challenge:

Providing credit insurance for their unique sales structure.

Results:

Outsourcing credit management to Atradius enabled the company to preserve bank financing support.

How we made it happen:

Atradius proposed an Outstanding Amount Policy to meet CEL's needs.

Credit Insurance from Atradius has helped us grow our business and supports us going forward.

Aerospace case study Joel Pouliot
CEL Group

CEL Aerospace Test Equipment Ltd designs, manufactures, installs and maintains systems for testing gas turbine engines. Their business operates on a milestone payment schedule as test cells are developed over an extended period. Having insurance was imperative to maintaining bank financing and Atradius provided a solution that would protect CEL's development costs exposure in a way that standard accounts receivable insurance could not.

Objectives

For CEL Aerospace Test Equipment Ltd., the key objective was maintaining bank financing during a period of rapid growth.

CEL does projects for large global aerospace companies that can take up to 14 months to complete. Joel Pouliot, Vice President, Finance at CEL Group said the lengthy project time lines were a concern to their bank and the reason why it insisted CEL have credit insurance coverage to protect Their receivables and project development costs. Three credit insurance providers were considered by CEL and their bank. It was Atradius that proposed a solution that illustrated they understood the unique needs of CEL's business structure. An Outstanding Amount Policy was customized to protect CEL over the full length of their projects and surprisingly this "tailored" coverage came in at a cost that was lower than the less effective policies proposed by the two other providers.

Our Role

How we tailor our support to suit CEL’s needs

A test cell can take more than a year to develop and financing that lengthy process can be a challenge. CEL receives milestone payments at set times during the project, however there are times when costs climb well beyond the payments received. As well, there is a balance outstanding at the end of each project. It was these risks of exposure that required insurance coverage.

Michael Russell, the Quebec Regional Manager for Atradius Canada had worked in the aerospace industry and he understood the time lines CEL operated under. His solution for

 

 

 

 

 

CEL Aerospace Case Study

 

 

 

 

 

the company was an Outstanding Amount Policy as it would meet the bank's requirements to secure accumulating project costs and accounts receivable, thereby giving CEL access to the financing they wanted for growth.

Even though Joel Pouliot is confident his customers are not a significant credit risk and CEL has yet to have a claim, he sees credit insurance as a necessary cost of doing business and a useful tool. Beyond the access to financing that the policy provides he believes he is also getting great value for money from collateral benefits. By having access to the Atradius database of 200 million companies around the world he has a wealth of information at his fingertips. He uses this resource when preparing to bid on a project, researching the credit rating and payment practice history of potential clients. This has proven to be very useful information to have during a negotiation and it has helped CEL negotiate and win bids.

Results

CEL needed a credit insurance solution that would match their bank financing. By taking the time to understand those requirements Atradius was able to structure a solution that would meet the needs of the bank and CEL, and they provided it in a cost effective policy. Joel Pouliot says, "I love the product and the way we are able to manage it. Credit insurance from Atradius has helped us grow our business and it supports us going forward."

 

About CEL Aerospace Test Equipment Ltd.

Case study

 

For over 25 years, CEL has been focusing its activities on
the design, manufacturing, installation and maintenance of systems for the testing of gas turbine engines.

Our expertise covers related systems and components, for aerospace and industrial applications.

CEL Aerospace is an approved source for the UTC group for gas turbine engine test cells and engine accessory test stands manufacturing.

Since 2011, CEL has expanded its capabilities and European presence with our Polish division, C.E.L Test Equipment Poland, located in Rzeszow, Poland.

The company opened its US division, CEL Aero USA Inc., in 2016.

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.