UPS Capital Capabilities Presentation

UPS Capital® capabilities

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Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS.

© 2014 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

UPS®: A single source One company for your supply chain needs• Small package delivery

• Transportation and global freight services

• Comprehensive logistics and distribution services

• Financial and insurance services — UPS Capital®

• Specialized mail services

• Consulting services

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UPS Capital® overviewProtect your supply chain, bottom line and cash flow

By leveraging UPS’s logistics expertise, UPS Capital delivers innovative and competitive solutions to help businesses finance trade and protect your goods against supply chain risks:

• Founded in 1998 as a financial services subsidiary of UPS

• Staff of over 300 professionals

• Offices throughout the U.S. as well as Canada, Asia, Latin America and Europe

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UPS Capital® capabilities

UPS Capital helps businesses conduct smarter trade by delivering parcel and cargo insurance, trade finance and payment solutions. By leveraging UPS’s global logistics network, we provide solutions that are smarter, more competitive and unique, so we can help you:

Anticipate risk

Accelerate cash flow

With an array of insurance offerings, UPS Capital Insurance Agency, Inc. can help mitigate the risks of trade and protect your business from the inherent complexities of global commerce.

Leverage the goods in your supply chain to obtain the working capital you need to invest in your business and customers.

Finance trade

Through a variety of solutions you can expedite customers’ payments and protect your international trade.

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Flexible parcel insuranceProtect your supply chain and your bottom line

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Flexible parcel insuranceFeaturesFlexible parcel insurance goes above and beyond standard carrier liability limits. It protects your high-value, time-sensitive and temperature-sensitive, perishable goods and other hard-to-value items in the event of loss, damage or delay.

Types of flexible parcel insurance available:• Basic: Covers loss or damage to goods in transit up to selling price• Expanded: Covers consequential losses as a result of delayed shipments. Also covers items

that are excluded from declared value (e.g., gift cards)• Multi-carrier: Insure all your parcel shipments with one policy, regardless of the small

package carrier you use • Time-in-Transit: Covers delays in transit for time-sensitive or perishable goods• Specialized programs: UPS Capital Jeweler’s Elite Program™ and UPS Proactive

Response® Secure• Bundled coverage: Basic, expanded and TNT combined into one policy

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Coverage Declared Value Flexible Parcel Basic

Flexible Parcel Expanded

Flexible Parcel TNT

Flexible Parcel Multi-carrier

Cost of goods • • • • •Selling value • • • •Consequential loss • • •

Perishables •Articles of unusual value • • •

Time guarantee •Use any carrier •

Flexible parcel insuranceAt a glance

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Flexible parcel insuranceBenefits when using UPS• Protects against damage to high-value, temperature-

sensitive, time-sensitive, perishable and hard-to-value goods

• Protects items that are ineligible for standard carrier liability programs

• Protects your bottom line against costly consequences related to your shipments, such as reconstructing documents, or interest on a late payment

• Flexible Parcel Insurance also provides coverage up to your selling price — not just your cost

• Provides transactional coverage

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Click icon to add pictureFlexible parcel multi-carrierBenefits when using another carrier• Insure all your small package shipments with one policy,

regardless of the transportation carrier(s) used

• No up-front costs or premiums• Unlike cargo insurance, which requires annual premiums, with

flexible parcel multi-carrier you are invoiced after you ship

• You can choose which shipments to insure and their insurable values, and then pay as you go

• Shipping and insurance are seamless • Insured values are automatically transmitted with the

submission of your shipping information

• Claims-handling process is simpler and faster

• Your business and its shipments receive superior protection

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Flexible parcel insuranceCase StudyExample client overview

• A leading paper manufacturer was required to ship original “certificates of origin” prior to shipping goods

• Certificates had to arrive at destination within five days or company had to pay for expedited reconstruction to complete its order

Challenge• Company was paying high reconstruction costs for a critical part of its transactions. They

sought to mitigate the risk

Solution• UPS Capital® Insurance Agency, Inc. provided a Flexible Parcel Insurance — Time-in-

Transit (TNT) insurance policy — to cover the company’s certificates

• If the certificates did not arrive within five business days, the reconstruction claim would be paid*, thereby reducing the customer’s exposure *Subject to policy terms, conditions and exclusions.

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UPS Proactive Response® SecureComprehensive risk managementA comprehensive risk management solution that utilizes proactive shipment monitoring and insurance to protect customers’ time-sensitive, temperature-sensitive, high-value, hard-to-value and/or perishable packages*.

For goods with high value or high replacement costs (blood and tissue samples, embryos, biopsies, etc.) UPS Proactive Response Secure can help ease the loss and recovery costs by:

• Expediting shipments — Reimbursing the expense of expedited delivery services, such as UPS Express Critical®

• Reimbursing for lost, delayed or damaged shipments; if a delivery is missed or the integrity of a perishable product is compromised, the amount - up to the sales price - of the goods is reimbursed*

• Intercepting temperature-sensitive compromised packages — Reimbursement of surcharges for intercepts requiring procedures to maintain critical temperatures

*See contract for complete terms and conditions.

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Flexible parcel insuranceExample case study — UPS Proactive Response® SecureClient overview

• A pharmaceutical company shipped valuable drugs via UPS Next Day Air® that required constant temperature control. The slightest variance would cause the drug to become unstable and unusable

Challenge• The airport where the drugs were being delivered was closed indefinitely due to a bomb

threat

Solution• UPS Proactive Response Secure team monitored the shipment for temperature control

• If the prolonged delay rendered the drugs unstable UPS Capital® Insurance Agency, Inc. provided an insurance policy to cover the company’s costs and reduce exposure, if the prolonged delay were to render the drugs unstable*

*See contract for complete terms and conditions.

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Protection against loss or damage to goods in transit up to the sales price, or $150,000 maximum

One-stop claims processing and fast payment

All UPS service levels, including ground

No signature required unless it’s a residential package valued at more than $1,000

No pricing tiers Billed on UPS invoice, no extra

invoicesIncludes weekly pickup and

printer feesLoose stone coverageInternational shipments to

up to 63 foreign countries

A shipping and insurance program created specifically for jewelers:

UPS Capital Jeweler’s Elite Program® (JEP) High-value, precious items (available in limited areas)

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Flexible parcel insuranceUPS Capital Jeweler’s Elite Program®

Example client overview• A leading watch manufacturer and distributor sent daily high-value shipments

to its clients

Challenge• Customer wanted assurance that high-value items would be safe and secure in

the UPS network. If something were to happen to these shipments, the business would be covered for the full sales value of the shipments*

• Customer also needed expedited service for claims reimbursement

Solution• UPS Capital® provided the Jeweler’s Elite Program to cover the full value of the

company’s shipments

• Customer also reduced one-half of an employee’s time per month by reducing claims *See contract for terms and conditions of coverage.

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Cargo insuranceProtect your supply chain and bottom line

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• Insures your goods are covered under one simple policy

• Open annual policy • Offers higher limits• Covers unique situations such as

trade shows, projects or more difficult commodities to insure

• Protects against concealed damage, expediting expenses, general average losses, labels and brand issues

Protects shipments against loss or damage — regardless of transportation mode or carrier

Worldwide, multimodal, multi-carrier for goods in transit or in storage

Completely customizableInsures a single shipment or all

shipmentsProvides coverage for profit

(items pre-sold)

Insurance policies and risk mitigation that fits your unique needs. Plus our simple claims process quickly delivers efficient resolutions and settlements*.

*See your policy for complete terms and conditions

Cargo insuranceFeatures

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Click icon to add pictureCargo insuranceBenefits

• The convenience of worldwide, multimodal (land, ocean or air) coverage available on any transportation carrier

• Customizable programs that cover shipping risk, warehouse risk and contingency losses to protect your financial interest in the goods

• Faster claims resolution with most claims processed within 12 days — many insurers ask for 30 days — so you receive your funds quicker

• Far-reaching coverage in one simple policy that other carriers may not offer because of the combined advantages of UPS’s logistics expertise and UPS Capital’s risk mitigation solutions that can protect your supply chain and your bottom line

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UPS Capital® claims process

*Minimal claims documentation needed for most claims. Additional supporting documents to be requested on a per claim basis, based on nature of the loss.

Supporting documents

Preserve all packaging, damaged goods and seals; take photos.

Collect all that apply: • Commercial invoice • Letter of instruction

to your carrier• Temperature records • SED form• Photo(s) • Police report• Itemized statement of claim • Packing list • Freight invoice • Doc/Delivery receipts • Loading/Unloading tallies • Notice of loss to carrier • Customs clearance forms

Letter of notice to carrier

Place all transportation carriers involved in the shipment, including steamship lines, airlines and trucking companies on notice. This notification should be faxed in order to submit a time-stamped document with the claim submission.

Claim form

Complete the official request claim form and statement of claim (which explains the specific details of the loss).Fax/Email documents to UPS Capital claims department.

Fax: 1-866-331-2774Email: [email protected]

Claims settlement

UPS Capital will begin working on your claims settlement, based on the documents sent in. They will contact you if any additional information is needed.

The majority of UPS Capital claims are paid within five days

Claims decision

Claim payment can be sent via check or directly deposited into your bank account.

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Sample claims documents

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Cargo insurance Carrier liability

Claim settlement is based on valuation (Ex. invoice value + freight costs)

Claim settlement is based on the weight of the shipment or invoice value (if declared and agreed by the carrier)

Coverage is all risk coverage Carrier pays only if he is legally liable for the loss. Carrier is exempt from acts of God, terrorism, strikes, civil commotions, etc.

No need to prove fault on the part of the carrier

Carrier must be proven liable

Coverage is door-to-door irrespective of the number of carriers used

A claim must be filed against each carrier individually

Claims are handled quickly Claims against carriers can be lengthy

Cargo insuranceAdvantage over carrier liability

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Cargo insuranceExample case studyClient overview

• A U.S.-based distributor of heavy-duty winter clothing imported goods from Asia and Africa

Challenge• The company used its general business-owner’s insurance policy (BOP) to insure

shipments. However, the cost for BOP insurance was excessive and the coverage for the company’s shipments was not comprehensive

Solution• UPS Capital Insurance Agency, Inc., positioned a comprehensive cargo insurance policy

to save money for the company, while expanding coverage for its shipments

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Trade credit insuranceImprove your cash flow

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Trade credit insuranceFeatures• Protect your domestic and international accounts receivable against

unexpected bad debt loss due to insolvency or protracted default (slow pay) of your customers

• Insure all or a majority of your business

• Online portfolio management system allows you to request, change or cancel coverage with ease

• File a claim when a customer is insolvent, or after an established amount of time in cases of slow pay

• With coverage in place, conduct your business as normal and benefit from added value credit analysis and collection services

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Trade credit insuranceBenefitsSafeguards one of your largest assets

• Credit insurance protects against a devastating loss to an unprotected asset — your accounts receivable

Supports your sales goals• Expand into new and unfamiliar markets much more

comfortably

• Ability to generate sales by extending larger lines of credit than you might normally offer

• Become more competitive compared to letters of credit by offering open account

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Trade credit insuranceBenefitsStrengthens your credit risk management controls

• Credit underwriters perform detailed credit analysis on your customers, lowering your credit investigation costs

• Credit insurance allows you to cap exposure to bad debt losses

Receive better financing terms with insured receivables

• Improve borrowing power and increase available capital when your receivables are insured

• Increase likelihood of bank lending against foreign receivables

Tap into collection services• A credit insurance policy also provides professional collection

and litigation assistance

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Trade credit insuranceExample case studyCompany overview

• A U.S.-based manufacturer/distributor of stainless steel bottles experienced significant growth over three years. The company typically offered its customers open account terms of net 30 days, but recently experienced bad debt losses of $20,000

Challenge• The company planned to expand overseas, including Asia, but needed to be more

competitive

• They were also concerned about concentration. The largest 20 of 2,000 customers represented half of total sales

Solution• A trade credit insurance policy was put into place to help protect against additional bad

debt losses from customer concentrations and expansion into foreign markets

• The company began extending credit terms beyond 30 days to become more competitive in the marketplace

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Cargo financeImprove your cash flow

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Integrated solutionsFinancing plus logistics• The financial expertise of UPS Capital® combined with

UPS’s proficiency in facilitating international trade makes us unique in the marketplace. We provide solutions that help finance your international trade

– UPS Capital Cargo Finance®

– Global Asset-Based Lending

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UPS Capital Cargo Finance®

Features• Provides inventory financing, on a transactional basis,

to customers who are importing goods via UPS ocean freight, air or cross border freight using UPS customs brokerage

• Unsecured facility with a $300,000 to $750,000 credit limit

• Advance rates of up to 70 percent

• Terms of 45-75 days

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Improves cash flow

The financing of international in-transit inventory shipped (all modes) by UPS. How it works:

1. U.S.-based borrower purchases inventory from an international supplier 2. UPS Capital finances a portion of the value of the international in-transit inventory that

is moved by UPS (air freight, ocean freight or small package)3. UPS Capital may extend credit lines of $300,000 to $750,000 with up to 75-day terms

Now, financing can occur at port of origin, much earlier in supply chain

From China: three weeks at sea, excluding any customs time or weather delays.

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Benefits• Access funds earlier in your supply chain

• Improve inventory management efficiencies with additional working capital

• Lower your cost of goods by paying your suppliers earlier in the supply chain

• Improve relationships with suppliers

• Reduce or eliminate the need for letters of credit

• Best in class logistics with UPS Freight® Forwarding

• Gain efficiencies in the supply chain

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Example case studyClient Overview

• Wholesaler of building materials supplies hardwood flooring and decking to big-box home improvement retailers, wholesalers and manufacturers

Challenge

• Supplier in Brazil required client to pay for shipment before goods left the port, draining valuable cash flow until the shipments arrived in the U.S. and goods were sold to customers

• Customer needed additional cash flow to fund continued operations and growth

Solution

• UPS and UPS Capital provided an end-to-end solution that included ocean freight, customs brokerage, UPS small package, cargo insurance and UPS Capital Cargo Finance®

• UPS Capital’s financing of imports increased working capital, leading to increased imports and business growth

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Global asset-based lendingImprove your cash flow

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Global asset-based lendingFeatures• A revolving line of credit secured by foreign warehoused inventory, international

in-transit inventory, domestic inventory and receivables

• Committed facility with a $750,000 to $25 million credit limit

• Advance rates of 50 percent or more on inventory per appraisal

• Generally used for finished goods but can also advance on raw materials

• Advance up to 85 percent of accounts receivable

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Global asset-based lendingBenefitsThe benefits compared to a traditional asset-based loan (ABL) facility• Increase working capital at favorable rates and improve supply chain efficiencies

Inject capital into your business• By converting receivables into cash or tapping the equity in your inventory, your business

can gain a fast and reliable source of working capital

Increase purchasing power• With an infusion of cash, your business can expand and take advantage of opportunities

that otherwise may not be affordable

Improve financial control• With asset-based lending you may take advantage of purchasing opportunities. Base

decisions on favorable market conditions instead of access to liquidity

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$2 million inventory in U.S.

warehouse

$12 million accounts receivable

ABL loan Typical ABL loan Integrated GABL loan

In-country (U.S.) inventory (50% LTV) $1 million $1 million

In -transit inventory (50% LTV) — $1 million

Out of country (non U.S.) inventory (50% LTV) — $1 million

Accounts receivable (80% LTV) $9.6 million $9.6 million

Total loan $10.6 million $12.6 million

$2 million inventory in Asian

warehouse

$2 million inventory in-transit

Global asset-based lendingGlobal asset-based loan structure (example)

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Global asset-based lendingExample case studyCompany Overview

• A U.S. wholesaler of seasonal outdoor products was importing from China, Taiwan and the Dominican Republic. Its customers were largely Fortune 500 retailers

Challenge• Customer needed additional working capital to fund continued operations and growth

heightened by the seasonality of the business

• Customer’s current lender was uncomfortable providing advances on inventory in-transit because of no supply chain visibility

Solution• UPS Capital® could increase senior debt facility from $15 million to $25 million, and extend

credit lines of $3 million on in-transit and $2.5 million on foreign inventory that were previously not available

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C.O.D. enhancement servicesImprove your cash flow

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C.O.D. enhancement servicesAccelerate and protect paymentsC.O.D. enhancement services accelerate your payments with a choice of options that can help your bottom line:

C.O.D. Automatic• Expedites funds availability. Electronic transfer of funds three business days after

package delivery through automatic payments electronically deposited into your account

C.O.D. Direct • Expedites funds availability. Electronic transfer of funds approximately six days after

package delivery

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C.O.D. enhancement servicesAccelerate and Protect PaymentsC.O.D. Enhancement Services accelerate your payments with a choice of options that can help your bottom line:

UPS C.O.D. Secure®

• Includes the same benefits as C.O.D. Automatic®, plus UPS Capital guarantees payments up to a pre-determined limit

C.O.D. Delayed Deposit Option • Available as an add-on service to C.O.D. Automatic and C.O.D. Direct. Saves time and

resources when you electronically select the dates you want customers’ checks deposited (1-90 days after package delivery)

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C.O.D. enhancement servicesFeaturesOnline reporting

• Statements

• Check images

• Download of remittance data

E-mail/fax statements• Daily remittance statements, which include an “Activity Summary” and “Returned Check”

details

• Activity Summary

Monthly loss reports (C.O.D. Secure®)

Real-time fraud prevention reports (C.O.D. Secure)• Multiple Returned Items Report

Collection agency services (C.O.D. Secure)

Manage deposit dates online via a secure web portal (C.O.D. Delayed Deposit)

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Collect on delivery servicesExisting UPS C.O.D. process (example)

Day 1

Day 2-3

Day 16

Day 4-8

Day 9-10

Day 11-16

UPS picks up checks and delivers package.

Checks delivered to UPS central processing center.

Checks mailed to shipper.

Checks received and processed by shipper’s accounting department for deposit.

Shipper’s bank begins the check-clearing process.

Funds available to shipper.

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Day 1

Day 3-4

Day 2

C.O.D. enhancement servicesUPS Capital C.O.D. accelerated cash flow (example)

C.O.D. Automatic — Faster cash flowC.O.D. Secure® — Faster cash flow plus credit protection

UPS delivers package and collects C.O.D. funds.

C.O.D. funds delivered to central processing center and deposit prepared for UPS Capital’s bank account.

Funds transferred to the shipper’s bank account via Automated Clearing House (ACH). Funds available same or next business day. If you have C.O.D. Secure, should one of your customers’ C.O.D. checks be dishonored upon deposit, UPS Capital® will pay you for that item, up to a specific limit.

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C.O.D. enhancement servicesC.O.D. Delayed Deposit Option (DDO)Take advantage of all the great benefits associated with C.O.D. Automatic and C.O.D. Direct while maintaining the flexibility to control the timing of individual check deposits via a secure online web portal. For an online demonstration, please visit: https://www.upscapital.com/solutions/cod_ddo.html

Benefits:• Helps increase sales by allowing seller to offer terms to buyers

• Allows sellers to offer alternatives to buyers who may not qualify for other payment methods

• Reduces administrative expenses associated with manually holding checks

• Eliminates bank fees associated with check processing and returned items

• Automatic deposit of funds into bank account

• Allows the shipper to maintain a single UPS account

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https://www.upscapital.com/solutions/cod_ddo.html



C.O.D. enhancement servicesProcess for C.O.D. Delayed Deposit Option (example)• UPS driver collects check at delivery

• The bank images all checks and reconciles data

• The bank puts a hold on C.O.D. checks based on the predetermined number of default days

• UPS Capital® system sends an e-mail alert to the C.O.D. shipper to view pending C.O.D. deposits

• Customer views check image(s) and relevant shipment information, then revises deposit date if desired

• Bank deposits the check on the specified date or the shipper’s default date (based on shipper profile)

• Shipper receives C.O.D. remittance statement from UPS Capital

• C.O.D. shipper receives direct deposit of funds to bank account

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Payment solution servicesImprove cash flow

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UPS Capital® merchant serviceAccept payments — anytime, anywhereFull range of payment options:

• Debit, credit, ACH, recurring billing, gift cards, e-checks, PayPal®, loyalty programs

• Mobile payment options

• Apps for iPhone®, iPad® and Android™

UPS Capital® Connect virtual terminal:• Process sales, e-mail invoices, set up payment plans

• Run transactions reports, charts and graphs, reprint receipts

• Manage customer and user information

Next-day funding that doesn’t require the merchant to change bank accounts

E-commerce capabilities

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Credit card fraud protectionHelp protect paymentsReduces fraudulent online activity and chargebacks

• Verified by Visa® and MasterCard® SecureCode® offer the highest levels of fraud protection

Enables safe international expansion• Process cards from all over the world without the worry of fraud

Reduces credit card interchange rates• Payer authentication can help reduce rates on every eligible transaction

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Continuous customs bondsProtecting your supply chain

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Customs bondsFeatures U.S. Customs and Border Protection (CBP) is not insurance. All importers of goods into the U.S. must post financial security. The importer can post cash, but the preferred security is a customs bond, also referred to as a surety bond that:

• Guarantees the customs border protection will receive payment of duties and fees and the importer will comply with customs regulations

• Allows goods to pass through customs without delays

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Customs bondsBenefits• Experienced customer service team handles bond filing and customs updates

such as address and name changes

• Daily monitoring of bond sufficiency with customs to ensure the current bond amount remains adequate and to prevent delayed release of shipments

• Availability of reporting tools to keep clients informed of their customs clearance activity

• Fraud protection service to alert clients of fraudulent use of their importer number

• Single service source

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Insurance is underwritten by an authorized insurance company and issued through licensed insurance producers affiliated with UPS Capital Insurance Agency, Inc. and its licensed affiliates are wholly owned subsidiaries of US Capital Corporation. Insurance coverage is not available in all jurisdictions.

All credit is subject to credit approval and applicable laws and regulations. Products may not be available in all areas. UPS Capital Corporation loans are made in California pursuant to a Department of Corporations California Finance Lenders license. UPS Capital HK Limited is a licensed money lender in Hong Kong under the Money Lenders Ordinance, and all loans are made in Hong Kong pursuant to that license. Each global supply chain finance solution will be governed by the terms, conditions, limitations and exclusions set forth in the applicable global supply chain finance agreement with UPS Capital Corporation and any other lender party thereto (the “Global Supply Chain Finance Agreement”). This information sheet does not in any way alter, supplement or amend the terms, conditions, limitations or exclusions of the Global Supply Chain Finance Agreement and is intended only as a brief summary. Please consult the Global Supply Chain Finance Agreement for the exact terms and conditions.

C.O.D. Enhancement Services products are offered through UPS Capital Trade Protection Services, Inc. UPS Capital Corporation and its affiliates reserve the right to change or cancel any C.O.D. Enhancement Services program at any time. Each C.O.D. Enhancement Services program is governed by the applicable terms and conditions governing participation in that program and certain limitations and exclusions apply. Information contained in this information sheet does not in any way alter, supplement or amend the applicable terms and conditions governing participation in any C.O.D. Enhancement Services program and is intended only as a brief summary of that program. The UPS C.O.D. charges as set forth in the UPS rates in effect at the time of shipping apply to each UPS C.O.D. package shipped. Some C.O.D. Enhancement Services may involve loans or the advancement of funds for anticipated C.O.D. receipts. Loans made in California are pursuant to a Department of Corporations California Finance Lenders License. C.O.D. Enhancement Services products may not be available in all jurisdictions. C.O.D. Automatic, C.O.D. Secure and C.O.D Direct are registered trademarks of United Parcel Service of America, Inc.

All services in connection with the UPS Capital Merchant Services Program are provided by Century Payments, Inc., a Registered Agent of RBS Citizens, N.A., Providence, RI. All decisions regarding approval of a merchant services application, and all fees charged for merchant services, are determined solely by Century Payments, Inc. The UPS Capital Merchant Services Virtual Terminal is powered by Maas Global Solutions (MGS).

All services in connection with the UPS Capital Credit Card Fraud Protection program are provided by CardinalCommerce® and all fees charged for services are determined by CardinalCommerce. All decisions regarding approval will be made solely by CardinalCommerce under CardinalCommerce’s then-current criteria.

All services in connection with Customs Bonds are subject to availability and may not be available in all jurisdictions.

© 2014 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.

Disclaimers

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Date post:	13-Apr-2017
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UPS Capital Capabilities Presentation

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