Receivables Portfolio Purchase is the true sale of concentrated portfolios of receivables, typically containing between 20 – 100 debtors, either directly to a funder or via an SPV. The solution uses a combination of rating agency methodology and credit insurance to partially wrap the portfolio, providing advance rates of between 85-95%. The solution is very efficient for bank regulatory capital leading to highly competitive rates. The facility is undisclosed and the seller maintains its relationship with its customers, continuing to collect the receivables directly.
Receivables Portfolio Purchase enables corporates to access off-balance sheet financing while accelerating the cash conversion cycle without incurring the cost of a full credit insurance wrap.
A wide range of clients use these structures ranging from investment grade telecoms companies, managing tight working capital metrics, to highly geared non-investment grade logistics and manufacturing companies whose primary objective is accessing low cost of funds, to large technology firms looking to reduce credit exposures in parts of their debtor ledger.
Receivables Portfolio Purchase, powered by the Demica platform, provides a valuable bank independent working capital solution that integrates directly with clients’ ERP systems as well as credit insurers to minimise the ongoing administrative burden on treasury teams while making syndicated transactions simple to arrange & manage.
For clients with strong credit ratings, funders are often flexible on whether segregated collections accounts are necessary. Multi-jurisdictional programmes are relatively simple to arrange within regions (e.g. Europe) and can be taken global by adding multiple funders to the structure.
“Demica’s expertise and technology platform have consistently proven themselves over 10 years. We would not have been able to implement or manage the programme without them.”
"Demica's expertise is impressive. Their technology is very adaptable, completely reliable and has enabled us to efficiently manage a complex programme without tying up internal resources.”
Angel G. Blanco
Director - Working Capital Solutions
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