accounts receivable insurance fund

 

General Overview:

Since 1st January 2006 it has become mandatory for all new members to participate in the "Accounts Receivable Insurance Fund". It may become a mandatory program for all GLN members in the future.

This program is not a 100% guarantee of coverage of bad debts but a system whereby participating members will receive some return rather than nothing. It has been set up to protect GLN members against debts from other GLN members that go into bankruptcy but may, at the discretion of the AR Insurance Fund Committee, be used against other debt situations. It will not be used for non-conformance with service levels and or shipments of personnel effects and or shippers/consignees connected with Internet mail services such as E-Bay. It must be fully understood that the AR Fund is primarily for bad debts as a result of a member going bankrupt and will only pay out up to an aggregate amount of $20,000.00 against any one GLN member going bankrupt, assuming that 80% of the funds meet $20,000.00

 

These AR Insurance Funds are owned by participating GLN Members and not by GLN.  They are independently administered by GLN Members on the AR Insurance Fund Committee and are kept separate and not co-mingled with membership fees.  These funds are refundable to participants upon leaving GLN as defined below.

Overview of Accounts Receivable GLN Insurance Program:
The final recommendation adopted and offered to GLN members, for those that wish participate, to self fund the A/R fund with US$500 per participating member per 12 month period.

 
The US$500 for each 12 month period will be ongoing and maybe refunded 90 days after resignation from the Network subject to confirmation from other GLN Members that all debts are current.  The amount refunded will reflect the amount paid into the fund less a proportional deduction for any claims made against the fund. A separate bank account will be maintained for the Accounts Receivable Insurance Fund and held by GLN.

Participating members that do not properly utilize the Amber Alert Procedures program may not be eligible for compensation.

There will be no charge by GLN for administrating the fund and will apply bank charges where appropriate.

Participating members would cover only the company name that was signed on the initial GLN Working Agreement at the time of membership and cover all shipments issued under that name from the date of enrollment.

Only those member offices/cities that have paid registration will be eligible to participate in this fund i.e. If Company A registers only for their office in Hong Kong but have several other offices within the region, only the office/s with paid registration are eligible.

Those paid offices are clearly noted on the Member Directory. Those participating members would be classified as a PLATINUM MEMBERS and therefore clearly indicate to the GLN family who is and who is not a member. Each participating member will be shown as a PLATINUM member on our web site and in our internal directory.  Non participating members cannot utilize the A/R fund.

In order to protect the fund, only 80% of the existing fund up to an aggregate maximum of *US$ 20,000 can be used for payments against any one bad debt against a GLN member.

Example:

Fund reflects US$23,000 in account. One of the members becomes insolvent with debts owing (5) Platinum members of US$30,000. GLN member A is owed = US$10 ,000 or 10k B=8k C= 6k D= 5 k E=1k = 30,000

Only 80% of the existing fund (USD23,000) is available for use, or US$18,400** (Maximum per incident would be US$20,000 from fund). If accounting is reconciled and sums owed are correct, then the pay out would be :

US$18,400 total and spread pro-rated as a percentage of the overall debt
     Forwarder A = 33% of debt or (33% of 18,400) = US$6,082
     Forwarder B = 26.7% of debt or (26.7 of 18,400) = US$4,923
     Forwarder C = 20% of debt or (20% of 18,400) = US$3,690
     Forwarder D = 16.7% of debt or ( 16.7% of 18,400) = US$3,083
     Forwarder E = 3.3% of debt or ( 3.3% of 18,400) = US$617
     A+B+C+D+E+ = 18,345 , which leaves US$4,655 remaining in fund.

This will allow some funds to be available for additional cases (Hopefully we do not get to that stage ever).

 

* The US$20,000 Maximum is subject to there being the funds available. The amount available for any claim is subject to the total funds contributed by members.

Any participating members, touched by bad debts (namely bankruptcy) incurred by another GLN member, must submit all A/P and A/R paperwork in order for GLN to reconcile and authorize compensation.

This fund is only to be used against GLN members in liquidation/insolvent and not for any disputes.

The fund protects members shipments from the members date of enrollment (funds received in the bank account), on shipments on a "go-forward" basis only.

Two Platinum Members (Detraco-Germany and Triway's-Sydney) will be asked to assist in the administration of the A/R Self Insurance Fund and a full accounting will be given to Members at the Annual Conference.

Annual Fees and the aggregate amount, per occurrence, are subject to change.