Trade Receivables Finance
What is Trade Receivables Finance?
In Trade Receivables Finance, a receivable purchase agreement is signed between a company and either a bank or specialist finance provider.
The trade receivables are either transferred or pledged to the financing provider. Trade Receivables Finance programmes can be structured in a variety of different ways, ranging from a solution that provides liquidity for a single debtor on an invoice-by-invoice basis, to a more complex arrangement for entire portfolios across a range of different operating companies.
Portfolios can be concentrated, with single debtors accounting for up to 50% of the total, and credit insurance is often used by the finance provider to mitigate risk. Usually the company retains control over the collections process, and the sale is not disclosed to the customer.
How does Trade Receivables Finance work?
What are the benefits of Trade Receivables Finance?
Provides access to new funding sources and structures that can be put in place quickly at highly competitive costs.
Can be structured off-balance sheet, which improve balance sheet and operating cash flow metrics
Can enable payment terms to customers to be extended without an impact on cash flow and with risk underwritten by a third party.
Why use Demica for your Trade Receivables Finance programme?
- Complimentary feasibility analysis: Demica will conduct a feasibility study at no charge and provide a simple cost-benefit analysis and recommendation.
- Structuring expertise: Our experienced structuring team can work with you to extract receivables data and build a sophisticated model to review with investors.
- Funder sourcing: With 20 years’ experience running programmes on our platform we have an unparalleled relationship with the global investor community.
- Managed implementation: We have experience working with 200+ ERPs and are able to combine structuring, implementation, and project management to drive successful execution.
- Platform automation: Our platform gives you real-time access to your underlying portfolio data and programme performance.