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Receivables Finance

  • Stephen A. Jones
Chapter

Abstract

A trade receivable is money due to a client from the sale of goods. Receivables finance accelerates receipt of monies which are due for payment at a future date. The use, structure, and risk assessment of receivables finance are described to include advance and debt purchase, prepayment, disclosed and undisclosed facilities, rights of recourse, and the methods of capturing the trade receivable proceeds. The risks of sales invoice deductions, concentration, and contra trade are highlighted. The importance of credit note history in the assessment of dilutions and dispute is explained. The use of a retention reserve and debt reserve account is discussed to accommodate a shortfall in proceeds. The concept of de-recognition is explained and the need for a ‘true sale’ of the debt.

Keywords

Collection and trust accounts Concentration Debt purchase De-recognition Determining the amount of prepayment Dilution risk Disclosed facilities Rights of recourse Risk assessment Undisclosed facilities 

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Stephen A. Jones
    • 1
  1. 1.AXS Trade Finance Ltd.Solihull, West MidlandsUK

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