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2 Trade Receivables Solutions
Our Trade Receivables Solutions let you shorten your DSO
and extend the DPO of your Buyers, allowing you to;
Improve liquidity for you and your Buyers
Enhance your Balance Sheet working capital position
Increase competitiveness by extending Buyer
payment terms
Reduce credit risk by transferring to a third-party
Obtain attractive short-term financing
We offer a range of solutions tailored
to your needs.
DPO DSO
▼DSO
▲DPO
DSO = Days Sales Outstanding/ Receivables days DPO = Days Payable Outstanding/Payables days
With GSCF, you can improve your working capital without compromising relationships in your supply chain.
3 Trade Receivables Solutions
Are you the Seller or Buyer
in the relationship that needs liquidity?
Receivables
servicing
Automatic payment
reconciliations, reduced
administration costs and
improved data visibility.
Extension of Buyer
Terms
Increased payment terms
to your Buyers without
impacting your working
capital or balance sheet.
Trade payables
financing
Buyers looking to extend
their payment terms, to
Vendors who do not offer
such extensions.
Vendor financing
Buyers extended
payment terms and offers
Vendors access to
financing, based on the
higher credit rating of the
Buyer.
Distribution
Financing
Maximising benefits for
all stakeholders by
combining reduced DSO
for Vendors and longer
DPO for Buyers.
Factoring
Improve your cash flow
by accelerating your cash
collections and reducing
your credit collection risk.
NO YES
Seeking to
shorten DSO
or extend
Buyers’ DPO?
Will the Seller
accept being
legally
involved?
YES NO
DSO
DPO
BOTH
BUYER SELLER
Trade Payables Solutions Trade Receivables Solutions
FUNDED UNFUNDED
Do you need to improve liquidity in
your supply
chain?
Which program is right for you?
4 Trade Receivables Solutions
Factoring
▼ Vendor DSO
= Buyer DPO
Program overview
Factoring allows you to improve your cash flow by accelerating your sales collections from a defined portfolio of Buyers.
A Vendor sells their trade receivables to a Funder, at a discount, accelerating their cash inflows.
The Funder assumes the credit risk and is repaid by the Buyer at the invoice due date.
GSCF works with you at every stage to understand your requirements and setup a program that matches your needs.
If the program achieves “True Sale” accounting treatment, the Vendor can remove the factored receivables from their Balance Sheet.
Funders usually obtain credit insurance to cover their risk of Buyer default.
Benefits to Vendor
Improved cash flow
Low cost short-term financing Balance sheet benefit – reduced DSOs
As well as all the benefits of Accounts Receivable Servicing (page 6).
Benefits to Buyer Trading terms with the Buyer remain unchanged
Ideally suited to Vendors with high-volume sales to a portfolio of credit assessable Buyers.
Who are seeking to increase liquidity and reduce credit risk.
DSO
Vendor
DPO
Buyer
5 Trade Receivables Solutions
Extension of Buyer Terms
= Vendor DSO
▲ Buyer DPO
Program overview By offering your Buyers increased payment terms you can enhance Buyer relationships and increase sales.
The extension is Off-Balance Sheet; meaning no impact to your credit risk, Balance Sheet or working capital.
Benefits to Vendor Enhanced Buyer relationships and competitiveness by offering increased payment terms
Timely settlement of receivables by Funder leads to predictable cash forecasts for Vendor
Mitigated credit risk (transferred to Funder)
Increased sales from Buyer liquidity benefits
Off-Balance Sheet, does not impact your working capital.
Alongside all of the advantages from Accounts Receivable Servicing (page 6).
Benefits to Buyer Balance Sheet benefit - increased DPOs
Enhanced Vendor relationship and competitiveness by receiving increased payment terms
Improved cash flow
Ideally suited to Vendors with high-volume sales to a portfolio of credit assessable Buyers.
Who are looking to increase sales by offering attractive
payment terms to their Buyers without impacting their
own Balance Sheet position.
DSO
Vendor
DPO
Buyer
6 Trade Receivables Solutions
Distribution Financing
▼ Vendor DSO
▲ Buyer DPO
Program overview
Financing program sponsored by the Vendor for a selected portfolio of Buyers whereby
The Vendor is paid earlier by the Funder
Buyers obtain extended payment terms
Due to the large-size and complexity of this type of program, Funders and Vendors prefer to leverage GSCF’s expertise. GSCF has an extensive track record of setting up and managing Distribution Financing programs for large blue-chip companies.
If the program achieves “True Sale” accounting treatment, the Vendor can remove the factored receivables from their Balance Sheet.
GSCF manages the complete program including on-boarding of Buyers, credit and collections, and reporting.
Distribution Financing programs are typically credit insured depending on the size and risk of the portfolio.
Benefits to Vendor
Enhanced Buyer relationships and competitiveness by offering Buyers increased payment terms.
Improved cash flow with Balance Sheet benefit – reduced DSO
Improved liquidity enables increased sales to Buyers
Reduced credit risk (transferred to Funder)
Timely settlement of receivables leads to more accurate cash forecasts
As well as all the benefits of Accounts Receivable Servicing (page 6).
Benefits to Buyer Balance Sheet benefit - increased DPO
Enhanced Vendor relationship and competitiveness by receiving increased payment terms
Improved cash flow
Ideally suited to Vendors with high-volume sales to a portfolio of credit assessable Buyers.
Who are seeking to increase sales whilst maximising liquidity and reducing credit risk.
DSO
Vendor
DPO
Buyer
7 Trade Receivables Solutions
Receivables Servicing
= Vendor DSO
= Buyer DPO
Program overview Your company outsources its credit and collection tasks to GSCF, who then manages your complete receivables processing;
invoice & credit note management
reconciliation of Buyer payments
management of individual Buyer credit limits
collection of Buyers´ financial statements and performing credit analysis
credit rating & monitoring of Buyers
automatic alerts and notifications of due and late payments
ensure compliance with credit insurance policy
Benefits to Vendor Increase monitoring of Buyers and reduce credit risk
Enhance credit & collections function
Reduce admin tasks and costs
We can assist the Vendor to obtain credit insurance and using our systems can lead to higher coverage.
Platform and external communications can be white labelled per Vendor preference.
Benefits to Buyer Trading terms with the Buyer remain unchanged.
Ideally suited to Vendors with high-volume sales looking to streamline credit and collection tasks whilst improving their risk management.
DSO
Vendor
DPO
Buyer
8 Trade Receivables Solutions
Our software platform
Our proprietary technology platform offers
unparalleled flexibility and automation for
management of supply chain finance programs.
Some benefits include;
Multi-currency, multi-lingual platform designed
for your global requirements
Fully automated processing that reduces
administration costs and risk of manual error
Credit limit approvals at Purchase Order stage
Real-time payment reporting empowering your
business to make informed credit decisions
Technically integrated with Funders and credit
insurers for reduced administration and faster
credit limit approvals
Visibility Web portal so you can always access your
program information.
Easy to understand, customisable dashboards
at summarised and detailed levels.
Identifies and notifies stakeholders of potential
credit risks automatically.
Automation Automated notifications and alerts
customized to your requirements
Real-time reconciliation of payments to
invoices and available credit limits
Credit limit requests automatically sent to
approvers enabling faster processing
Processing in accordance with credit
insurance policy conditions, always ensuring
compliance
Ease of Use A system that points you in the right direction
letting your people know what requires their
attention.
Extensive training from our multi-lingual
operations teams located across Europe and
the Americas.
Our in-house development team allows us to add further
individual features if required. ISAE3402
ASSURED
9 Trade Receivables Solutions
Typical Program Cycle
1 Order Placement
2 Invoice and goods sent out
3 Vendor uploads invoice data to GSCF system
4 Invoices verified by Buyer
5 Report sent to confirm amount due to Vendor from Funder
6 Funds paid to Vendor by Funder
7 Report sent to Buyer confirming amount payable and due date
8 Buyer pays amount due to Funder on agreed terms
Notes
* By changing the timing of steps 6 and 8 relative to standard credit terms determines
the improvement in DSO and DPO for Vendor and Buyer.
1
2
3 4
5
5
6*
*
7
8*
Vendor Buyer
FUNDER
10 Trade Receivables Solutions
FAQs
1. What type of Buyers could be considered?
GSCF can consider any type of Buyers, as long as they are credit-assessable
and have an established relationship with the vendor, showing a good trading
track record. Buyers in A/R based programs are typically distributors or
resellers, although they can effectively be from any industry operating with
open-account. GSCF recommends providing a well-diversified portfolio of
Buyers that are not in distress.
2. Are programs disclosed or undisclosed to Buyers?
Programs can be structured to the preference of your company.
3. Is there a cap on the program size or number of Buyers involved?
There are no limitations in terms of program size cap or maximum number of
Buyers involved in a program. GSCF can set-up and manage sizeable A/R-
based transactions with a total program limit in the billions of dollars with
hundreds of Buyers. GSCF has special features that assist large deals, such
as participation management (for Funders that bring in participants) and
watch-lists/scorecards/dashboards (for credit managers overseeing large
portfolio of Buyers), amongst others.
4. What is GSCF´s experience with credit insurance?
GSCF has a vast and successful experience with credit insurance, having
long-standing partnerships with the world-largest credit insurance companies.
GSCF can help in both - structuring insured-programs, i.e. finding the right
underwriter/s and assisting in the insurance policy drafting; and also servicing
insured-programs, ensuring that the company stays compliant with the
conditions of the policy at all times. Credit insurers appreciate the risk
management tools and transparency granted by GSCF´s processing and tend
to have increased appetite on GSCF-managed programs.
5. How much will a program cost?
SCF programs are designed to be more competitive than short-term bank
financing due to the lower level of credit risk taken by the financing party
(Funder).
Program cost will be determined by:
The term of financing required
The level of credit risk involved for the Funder
Possible use of credit insurance on the Buyer(s)
Level of processing complexity involved i.e. multiple
currencies/jurisdictions
Legal setup costs (depends on country)
6. How long after sale of invoice can I receive payment?
A minimum of one week is needed, depending on the program Funder.
7. What is the accounting treatment of an A/R program?
GSCF can structure A/R-based programs whereby the Vendor (also called Seller,
Originator or Vendor) sponsoring the program achieves “True Sale” of the trade
receivables sold to the program Funder. This means that the A/Rs are taken off-
balance sheet, allowing the Vendor to reduce Days Sales Outstanding (DSOs)
thus enhancing its working capital and operating cash flow. It is worth noting that
the accounting treatment will be ultimately defined by the company´s auditor and
will depend on the applicable accounting rules.
8. Will there be a level of Vendor recourse required?
Typically there is a certain level of recourse to the Vendor required, but not
always. This depends on the level of risk involved for the Funder. Where
recourse to the Vendor is required, GSCF’s structuring experts will work with your
business to achieve “True-Sale” accounting treatment.
9. What information would you need from us during the program?
In order to initiate discussions on program parameters and the evaluation of an
A/R portfolio, we will request you to complete and return an application providing
details on the Account Debtors (Buyers) such as annual purchasing volumes,
payment terms to be granted, aging of Receivables, etc. During the day-to-day
operations of a program the Vendor is only required to submit the Accounts
Receivable data to GSCF and this procedure can be fully automated and
supported via a range of industry-standard formats and transmission methods.
11 Trade Receivables Solutions
10. What are the key milestones and timelines to implement a program?
Below is a high-level overview of the steps leading to the successful
implementation of an A/R financing program:
Initiation: Submission of A/R portfolio and collection of your financing
requirements.
Structuring: GSCF reviews with its partner financing institutions, including
credit insurance providers if required, and reverts with an indicative Term
Sheet explaining the solution structure proposed for your consideration
including:
Credit limits for Buyers in the portfolio
Terms of the program, including payment terms offered to Buyers
Initial pricing estimate
Conditions precedent to program activation e.g. Buyer financial statements
Information required for a final offer
Process Definition: Once the Term Sheet is signed and we approach
activation of the program, our Business Operations team collects your
reporting requirements and performs any implementations required in order to
customize our platform and its capabilities to your specific needs.
Activation: Once the applicable agreements are executed, we will perform
the final steps leading up to program activation, such as:
Conduct technical discussions and perform testing for transmission of A/R data to GSCF’s platform.
Perform onboarding of Buyers in the portfolio
Conduct training sessions on using our web-accessible portal
Set up user accounts and accesses to the program portal
11. How will GSCF support my business once our program has been activated?
Upon setting up a program a dedicated Credit Operations team will be
assigned to the program and will be responsible for activities such as
performing and monitoring day-to-day tasks and communication related to the
program, as well as handling queries and requests.
12 Trade Receivables Solutions
To learn more about our products,
technology platform and financing
options please contact a member of
our team.
Global Supply Chain Finance Limited
+41 41 922 2200 Tel
+41 41 922 2201 Fax
www.gscf.com
Gotthardstrasse 2, 6300 Zug, Switzerland
Matthew Reddington
Business Development Manager
+41 41 922 2264 Direct
Asad Umar
Business Development Manager
+41 41 922 2261 Direct