denotes premium content | Sep 3 2010 
Feature
posted 11 Jan 2010 in Volume 13 Issue 4
Sponsored comment from UniCredit Group
Key factors
Demand for receivables purchase is increasing as companies turn to more imaginative ways of raising capital and smoothing cash flow, says Robert Fleischmann, Head of Structured Trade and Commodity Finance at UniCredit Bank Austria.
In 2009, demand for structured trade finance products increased strongly. Corporate customers were confronted with increased costs of financing due to the crisis in the financial markets and the national economies, their own deteriorating credit standings and the more cautious attitude of banks towards credit risk.
In this difficult economic environment, tailor-made financing facilities such as ‘structured receivables finance’, especially in the consumer goods industry, have increasingly attracted the attention of suppliers of goods and services. In particular, the purchase of receivables without recourse to the seller has become a favoured alternative to a normal bank loan.
By means of a purchase of receivables, the payment terms granted by exporters/suppliers to their off-takers can be financed. The most frequently used instrument for this purpose generated out of the export/supply of goods and services is the revolving purchase of receivables, without recourse to the seller.
Receivables of the exporter/supplier against a number of specified debtors will be purchased on the basis of a master agreement, which contains the basic conditions under which the receivables will be purchased. Usually, the purchase of receivables is effected on a disclosed basis with a notification to the off-taker.
However, in specific cases and certain industries, an undisclosed purchase of receivables can be offered. “We offer our clients individual solutions in respect of purchase of receivables transactions, which provide a number of benefits for the companies,” says Robert Fleischmann.
The main benefits of receivables finance without recourse are immediate liquidity for the seller, balance sheet optimisation and the transfer of risk to UniCredit Group. Due to increased liquidity, generated through the selling of the receivables to the bank, the exporter/supplier is able to expand its business with its off-takers.
One important aspect, which makes the purchase of receivables without recourse particularly attractive for small and medium-sized enterprises (SMEs), are the Basel II regulations. These result in reduced credit lines combined with increased costs of financing for SMEs.
The terms and conditions for a purchase of receivables depend on various criteria, of course, such as the credit standing of the off-taker, the structure of the transaction and the potential/available collateral (for example, cover of Austria's OeKB or any other export credit agency, the insurance policy of a private insurance company, bank or corporate guarantees and so on).
Robert Fleischmann can be contacted by emailing robert.fleischmann@unicreditgroup.at
