Benefits of Securitizing Trade Receivables
If you carry a large AR book and you can prove collections discipline, securitization can drop your all in funding cost, raise advance rates, and create a repeatable capital channel that grows with sales. Here is what you gain compared to ABL lines or factoring.
Outcome:
a bankruptcy remote SPV that buys your receivables and funds them with senior and mezzanine notes, giving you cheaper capital, more headroom, and stronger cash control.
What You Get When You Securitize
Lower cost at scale
Senior paper can price inside ABL once the pool is clean and sized. Fixed setup costs are spread over a larger base.
Higher advance rates
Eligibility tests are precise. With tight data and lockbox control, seniors push higher advance on prime obligors.
Stable capacity
Warehouse to term model gives durable capacity that grows with sales, not quarterly bank appetite swings.
Off balance sheet potential
With true sale and derecognition, leverage optics improve. If not, treat it as secured borrowing and still bank the pricing win.
Better counterparty mix
Tap bank conduits, private credit, and insurers in one program. You are not hostage to a single lender memo.
Cleaner governance
Trustee, admin, and clear waterfalls remove debate over who gets paid first and when cash sweeps happen.
Custom triggers
Early amortization trips on objective tests. If performance dips, the deal pays down in a controlled way, not in a panic.
Stronger buyer discipline
Collections teams level up because data and dispute logs are watched by investors and the trustee.
Financial Impact Compared To Other Options
| Feature |
Securitization |
ABL Revolver |
Factoring |
| All in cost at scale |
Low to mid single digit spread over base for senior, mezz behind |
Mid single digit spread over base, fees vary by cycle |
Highest, discount plus extras on disputes and recourse |
| Advance rate on prime obligors |
High with tight eligibility and lockbox |
Good but capped by policy and ineligibles |
Varies, often lower after reserves and fees |
| Capacity growth with sales |
Strong, warehouse to term ramp |
Moderate, credit committee cycles can drag |
Weak, buyer limits and fees choke growth |
| Balance sheet presentation |
Possible derecognition if true sale is achieved |
On balance sheet debt |
Off balance sheet for some programs, but costly |
Who Gets The Biggest Win
AR outstanding above USD 50 million
Enough volume to make fixed legal and admin costs small as a percent of funding.
Diversified obligor base
No single buyer over set caps. Cleaner eligibility, fewer reserves, better pricing.
Strong data tape
At least 24 months of billed, paid, DPD, recoveries, and dilution trends by cohort.
Collections discipline
Lockbox or account control live, daily sweeps, and clean reconciliations to GL.
Trade Offs To Be Honest About
| Topic |
What it means for you |
| Upfront legal spend |
Material setup cost first time out. Payback comes from larger, cheaper senior balances. |
| Ongoing reporting |
Monthly packs and data feeds. Your finance stack must deliver accurate numbers on time. |
| Trigger management |
If KPIs breach, the deal pays down early. Discipline matters. |
Fast Benchmarks
| Item |
Typical range |
| Recommended minimum rolling AR |
USD 25 to 50 million for private warehouse, USD 100 million plus for rated term |
| Upfront setup budget |
Low seven figures for rated term, mid six figures for private warehouse, plus arranger |
| Time to first draw |
60 to 120 days once data tape and account control are ready |
If you want cheaper, repeatable capital against receivables and you have the volume to support it, we will scope your data, model advance rates, and give you a costed path to warehouse or term. Send the last 24 months AR data tape and your buyer map.
Assess Your Securitization Readiness
Share your AR tape, obligor concentrations, and target capacity. We will return indicative pricing, advance rates, and a closing timeline.
Talk to the Team
Ranges and timelines are indicative. Any securitization requires due diligence, KYC and AML checks, sanctions screening, and legal opinions on true sale, tax, and accounting. Final pricing and structure depend on pool performance and investor appetite.