logo

Products

Asset Based Lending

Asset-based loans (ABL) are a simple and efficient way of financing receivables. The simplicity of the structure drives short implementation and structuring timelines, that help companies quickly release incremental liquidity.

The programme can be easily tailored and expanded to accommodate organic growth, and new jurisdictions or business lines, depending on the company requirements.

img

How does it work?

Asset-based loan programmes are based on the financing of a pool of receivables; receivables being the asset base. The amount of funding is based on the total balance of eligible receivables and an agreed advance rate. These programmes are structured so the loan is backed and secured by the receivables.

Demica’s platform automatically processes the portfolio on a daily basis, monitors portfolio performance and delivers regular transaction reports. Programmes can be tailored to meet client requirements, including the addition of sellers across multiple currencies and jurisdictions.

Benefits

Increase cash available

Access alternative source of funding

Short implementation and structuring timeline

Lower cost of funding

Higher amount of funding compared to traditional lending

Access to special situations

Success factors

Prior to implementing the programme, it is important to ensure certain receivable and portfolio characteristics are met. This initial assessment ensures that the feasibility of the programme is ascertained early on to ensure successful implementation.

Debtor quality

The portfolio should be based on a debtor book that is of reasonable quality

No receivable restrictions

The Receivables must be unencumbered and free of restrictions to using these as security, including debt covenants and receivable contract restrictions, in a creditor-friendly jurisdiction, such as the UK or USA

Portfolio performance

Good portfolio collection and dilutions performance, with the majority of clients paying on, or shortly after, the due date, and low credit note balances

Thought leadership