Over the last 12 months we have seen a marked increase in interest in trade receivables financing in general and trade receivables securitisation in particular.  This is a specialised area which brings with it unique challenges but also stable long term financing opportunities.

Introduction

Trade receivables are commercial debts generated by the sale of goods and services between businesses.  From a financier’s perspective, they are an attractive asset because: (i) they are self-liquidating; (ii) (typically) short-dated; (iii) often suitable for revolving financing and (iv) there is an enormous volume and variety of receivables to finance and a range of techniques to do so.

Trade receivables can be less volatile than consumer receivables because companies are hesitant to stop paying their suppliers (especially where alternatives are limited).  While debtor performance is affected by the economic cycle, trade receivables themselves are unlikely to be affected by asset bubbles of the type which affect other securitisable assets.  Historically trade receivables securitisations have performed well and in some transactions, the revolving period has continued for over a decade.
Continue Reading Trade Receivables Securitisation