Utah Metal Works is a 'reverse wholesaler' of non-ferrousmetals destined for recycling. The company purchases metal mostlyfrom manufacturers, demolition companies, and constructionbusinesses in the Salt Lake City area. It grinds, chops, cuts, andsorts, then packages the recyclable metal in a way that prepares itfor direct melt.

The companies that buy this material range from small localfoundries to corporate giants halfway around the globe. A decadeago, Utah Metal Works accepted the risk that some of its tradereceivables might default. But as commodity prices rose and thebusiness expanded both domestically and abroad, the company turnedto trade credit insurance to protect itself in the event that acustomer fails to pay. Treasury & Risk satdown with Chris Lewon, co-owner and operator of Utah Metal Works,to discuss why credit insurance seemed like a good solution formitigating receivables risk in a commodity-based business.

T&R: Before you began insuringyour trade receivables, how did you manage credit risk?