Receivables securitization with Finacity
Your receivables can be a source of working capital before customer payments arrive. Finacity Corporation, a wholly owned subsidiary of White Oak Financial, specializes in structuring and providing efficient capital markets receivables funding programs.
From portfolio analysis and funding-source selection to ongoing administration, Finacity brings these parts of a program together around your business's funding needs.
Explore receivables financing
Program structure
Turn a receivables portfolio into funding
The financing is built around your receivables portfolio and the way it performs.
In a typical structure, the company that originates the receivables sells them to a special purpose vehicle (SPV). The SPV raises funds for a portion of their value by issuing a funding note or selling the receivables on to a funding source. The company receives those proceeds as an initial purchase price, with the balance payable as the receivables collect.
Finacity's work can include analyzing your receivables portfolio, finding a suitable funding partner and structuring the transaction to meet lender requirements and applicable rating-agency criteria. These connected tasks help establish how a program can be arranged around the receivables and the company's funding objectives.
Portfolio analysis
Understand what your receivables can support
The total value of your receivables is a starting point for analysis. Eligibility criteria and concentration limits determine which receivables count toward funding under the program. Receivables outside those criteria and limits receive no value in the borrowing base.
Reserves then account for characteristics of the eligible pool. Finacity's approach considers three types:
| Reserve | What it accounts for |
|---|---|
| Dilution reserve | Non-cash reductions in receivables, such as credit notes, based on historical dilution |
| Loss reserve | Historical aging and losses in the receivables portfolio |
| Yield and fee reserve | Amounts set aside to cover financing interest and fees as the transaction pays down |
This is why the gross receivables balance and the amount available for funding can differ. Portfolio composition and performance matter to the structure, as well as the headline balance.
Where appropriate, Finacity can structure a program with trade credit insurance to support advances against certain foreign receivables or weaker credits that would otherwise be excluded. Insurance may also help address customer concentration in some cases.
Finding an appropriate funding source
Finacity solicits bids from appropriate funding sources when structuring a securitization program. Its role includes evaluating funding options beyond a client's existing banking relationships. Finacity works with bank and non-bank working-capital providers around the world, helping broaden the range of potential funding partners for your receivables.
Ongoing administration
Manage the program as receivables change
New invoices, collections and credit adjustments change a receivables pool throughout the life of a program. Ongoing administration keeps those changes connected to the transaction's funding and reporting requirements.
Finacity tracks a client's accounts receivable portfolio daily, using portfolio-activity data supplied by the originator. Its program management work includes:
- Valuing collateral and maintaining reserves
- Calculating receivable purchases and payments of fees and interest
- Producing reports and managing cash disbursals
- Monitoring termination triggers and the historical basis for reserve adjustments
Finacity also offers invoice verification, fraud detection, dispute resolution and customized reporting. Daily, weekly and monthly reports can provide different views of the pool, from current activity and collateral levels to concentrations, aging, reserves and deal activity. Weekly reporting helps clients identify receivables performance issues and consider corrective action. Finacity also uses data analysis, research and predictive modeling to provide early warning of declining performance by customer, location or division.
Its reporting platform can also support other working-capital facilities, with reports tailored to the needs of clients and lenders.
Receivables across business units and currencies
When receivables are spread across divisions or locations, bringing the data together is part of the financing task. Finacity's multi-currency, multi-lingual platform can combine receivables from multiple divisions, business units or locations. For cross-border transactions, Finacity can also help navigate complex jurisdictions and arrange funding in multiple currencies.
Alternative structures
Consider the structure alongside the funding need
The size of a receivables pool, a small number of obligors, significant customer concentrations or longer payment terms can influence the choice of financing. A need to fund inventory as well as receivables may also call for another approach.
With White Oak's asset-based lending, the discussion can include inventory and other business assets alongside receivables. The amount available to draw depends on eligible collateral values, the agreed facility limit, existing borrowings and facility conditions.
Finacity works with clients to consider the structure in relation to their needs. Its alternative financing capabilities include:
- Portfolio factoring, with or without recourse
- Single-obligor receivables purchase facilities
- Supply financing facilities
- Payables auction management
- Asset-based loans
- Secured pre-export and structured trade finance facilities
- Forfaiting
These options allow the discussion to extend beyond a securitization where another structure may be more appropriate.
Specialist services
Other receivables and specialist services
Finacity's financing work also extends to consumer and alternative assets, including:
- Auto loans, leases and dealer financing
- Revolving consumer receivables
- Retail and marketplace lender installment loans
- Merchant cash advance contracts
- Distressed receivables
- Sovereign and municipal receivables
- Long-term contracts
- Specialty finance assets
Supplier finance and administration services
Alongside capital markets receivables funding programs, Finacity's services include supplier and payables finance, back-up servicing and bond administration. Its working-capital capabilities include supply receivables purchase facilities and payables auction management.
Global reach
Global receivables experience
Finacity facilitates the financing and administration of an annual receivables volume of approximately US $150 billion. With resources in the USA, Europe, Latin America and Asia, it conducts business throughout the world with obligors in 175 countries.
This is the context for Finacity's work with receivables across markets, business units and currencies, alongside the structuring and administration a particular program requires.
Get in touch
Discuss your receivables financing needs
Talk with Finacity about the receivables you want to finance, your funding objectives and any wider working-capital needs. Its team can help you explore the structure and administration your situation may call for.