Accounts Receivable Securitization

Abstract

There are approximately $10 trillion accounts receivable in the United States, a comparable amount in Europe, and more globally. According to estimates, a mere $60 billion have been securitized in the U.S. There are hurdles for companies implementing receivables securitizations. However, innovative solutions have been developed in recent years to provide more efficient access. Historic performance-based reserve calculations and carefully monitored structures can offer investment-grade executions even for non-investment-grade companies. Improved funding rates, preferred accounting, risk mitigation, cross-border flexibility, and funding diversification can motivate companies to implement receivable securitizations.

TOPICS: Accounting and ratio analysis, legal and regulatory issues for structured finance