Multi-corporate factoring programs

Factoring programs can be time sensitive and very dynamic

Aronova operates a number of non-bank multi-seller invoice finance transactions (“fund-the-factor” programs), where corporate sellers are originated by an asset manager or a sector specific service provider and eligible receivables are purchased through an SPV.

Factoring programs have a number of distinct characteristics that make them generally more challenging than single corporate programs:

The multi-seller nature of factoring programs complicates debtor credit limit management
Factoring programs often involve large, constantly changing volumes of invoices and seller – debtor relationships
There is time pressure on making eligibility decisions and deciding whether or not to purchase an invoice

Factoring programs are often credit insured and can have different operational approaches.

Insured Limits

The factor provides Aronova with a daily feed of all receivables. We calculate an Insured Limit per debtor, which is then transmitted back to the factor. The factor then manages invoice eligibility calculations and the allocation the debtor credit limits to individual sellers. Here the factor decides which invoices are eligible.

Insured Invoices

This option extends on Insured Limits, as we now determine which invoices are eligible for the funding program and transmit them back to the factor. The factor then manages pricing and determines which (eligible) invoices to buy. The Insured Invoices option is often favoured by the insurer and the funder, as it gives them significantly more control of the factoring program. But it equally helps the factor who now has insurance certainty at an individual invoice level.

In both options we provide transaction parties with near real-time visibility of the multi-seller, multi-debtor relationships and associated aggregations.

As a general trend, we’re increasingly seeing Factoring programs move to a dynamic environment supported by AronovaLive! where the factor exchanges real-time data with us via APIs and gets instant credit limit or instant invoice eligibility decisions.

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