Master Receivables Purchase Agreements (MRPA) In Trade Finance

What An MRPA Is And Why It Exists

An MRPA is a master agreement between a seller of receivables and a purchaser. It allows the seller to offer invoices that meet preset eligibility tests, and it allows the purchaser to buy, pay cash, and take title. The objective is repeatable liquidity, clear risk transfer, and predictable operations across many buyers, currencies, and shipment dates.

Where MRPAs Fit In The Trade Workflow

• Seller-Led Receivables Purchase. The supplier sells receivables to a bank or fund once goods are delivered or invoices are approved.
• Buyer-Led Approved Payables. A buyer approves invoices and invites suppliers to sell them under the buyer’s program MRPA or equivalent form.
• Forfaiting And LC-Backed Paper. Receivables under documentary credits or avalised bills are purchased on a non-recourse basis with shorter tenors and defined evidence.
• Platform Models. Fintech or bank platforms operate one MRPA per supplier with standardised data feeds, notices of assignment, and controlled collections.

Core Mechanics Of An MRPA

Non-Recourse, Limited Recourse, And Dilution

Many programs are non-recourse for buyer credit risk once an invoice is eligible and purchased. Limited recourse often remains for commercial disputes, breaches of warranty, and excessive dilutions such as returns, rebates, and volume discounts beyond an agreed reserve. The MRPA sets dilution caps and the seller funds a reserve or accepts chargebacks when thresholds are breached.

Documentation Building Blocks

Accounting, Audit, And Derecognition Considerations

Sellers often target derecognition for purchased receivables. Whether derecognition is achieved depends on transfer of risks and rewards, continuing involvement, and control tests under the relevant standards. Auditors will examine recourse provisions, dilution and dispute handling, collection control, and whether the purchaser can freely pledge or exchange the asset. Purchasers assess their measurement, reserve policy, and any insurance treatment. Both sides should align early with auditors and tax advisors.

Operational Controls And Data Discipline

• Data Tape. Invoice-level data with obligor, currency, invoice date, due date, shipping reference, tax lines, credit notes, and disputes.
• Buyer Communication. Notice of assignment where required, or silent collections with lockbox controls where the law allows.
• Collections Control. Dedicated account or hard lockbox to reduce commingling and set-off risk.
• Dilution Tracking. Real-time capture of credits, returns, and rebates with seller-funded reserves or automatic adjustments.
• Dispute Governance. Timelines for response, escalation, and settlement with documentation kept for audit.

MRPA Compared With Other Structures

Governing Law, Assignments, And Local Nuances

• English law and New York law are common for cross-border programs, paired with local notices or filings where the obligor sits.
• Some markets require buyer notification or specific assignment wording to perfect the sale.
• Public sector buyers and regulated industries may impose consent steps before assignment.
• Stamp duty or documentary taxes can apply; structure to avoid unnecessary leakage.

Risk Management Inside An MRPA

Illustrative Use Cases

1. Exporter With Mixed Buyer Quality. Export receivables sold under non-recourse MRPA with country caps, political risk add-ons, and buyer notifications in higher-risk markets.
2. Retail Supplier With Seasonal Peaks. MRPA provides early cash during peak shipments; dilution reserves handle end-of-season returns and markdowns.
3. Industrial Seller With Long Tenors. LC-backed invoices purchased on a forfaiting schedule; non-recourse for bank risk once documents comply.
4. Buyer-Led Program For Strategic Vendors. Buyer approves invoices on platform; suppliers opt in to sell at pre-agreed discount tables under a light-touch MRPA or accession form.

Checklist Before You Sign An MRPA

• Eligibility grid, obligor list, and country limits are explicit.
• Purchase price formula, discount basis, and fees are unambiguous.
• Collections control and waterfall order are attached as a schedule.
• Dilution definitions, caps, and reserve mechanics are clear.
• Dispute handling timelines and evidence are defined.
• Buyer notification rules and templates are agreed.
• Tax, withholding, and any stamp duty items are addressed.
• Insurance endorsements and assignment wording are final if used.
• Audit and reporting packs are workable for your team.
• Governing law, jurisdiction, and enforcement routes are aligned with counsel advice.

How We Structure And Place MRPA Programs

We scope the buyer set, corridors, and historic performance. We draft or refine the MRPA, add schedules for eligibility, pricing, and collections, and build a concise data room that a credit officer can read. Where coverage helps, we place trade credit insurance with assignment language lenders accept. We distribute to banks, trade funds, and platforms and aim for two to three comparable proposals for clean files. We negotiate spreads and remove non-core fees, then support closing and initial reporting so the program funds on time.

Frequently Asked Questions

This article is for corporate readers and finance professionals. It is not legal, accounting, or tax advice and it is not a commitment to purchase receivables, insure, or lend. Any transaction is subject to know-your-customer checks, anti-money-laundering controls, sanctions screening, credit approval, and contract negotiation with relevant counterparties and advisors.