AR Securitization
Accounts Receivable Securitization
Companies
Can Benefit From Receivables Securitization
Accounts Receivable Securitization (AR Securitization) is securitizing the receivables portfolio of a company. Generally available to larger companies with annual sales of at least US$100 million and millions of dollars worth of accounts receivables, these companies can convert their accounts receivables into readily available cash upon securitizing their receivables. This means that individual receivables are assembled into a portfolio as a new security instrument, which is then sold to investors.
Corporate Finance New York is an originator part of a global funding group which offers securitized non-recourse accounts receivable securitization factoring to larger corporations globally, the product allows our clients to secure funding against specific portfolio receivables and since it’s backed by a liquid form of collateral, securitizing their receivables can also result in a more competitive low interest rate factoring facility.
Typically the securitization process involves a periodic true sale of the accounts receivables to a Special Purpose Vehicle (“SPV”) then in turn, using the receivables as collateral, capital is raised at a percentage of the total value of the accounts receivables. The company (our client) receives the initial capital that was raised by the SPV with the remaining balances payable as the receivables are collected.
MINIMAL TRANSACTION REQUIREMENTS – CLIENTS SHOULD:
- Have US$100 million in annual sales (minimum)
- Require funding ranging from US$5 million to US$50 million
- Have at least US$5 million in accounts receivables
If the client do not meet these requirements, we can still consider the funding request under an invoice factoring or export factoring facility. Benefits of a securitization transaction include:
- Diversification of funding sources
- Liquidity maximization
- Lower all-in cost of funds
- Minimal restrictive and financial covenants
- Other assets not encumbered
- Risk mitigation
- Potential for off-balance sheet treatment
Please contact us via this SHORT FORM for more information.