The Credit Facility Application

Abstract

The credit approval of a trade and receivables finance proposition relies upon clear articulation of the risks, mitigants, transactional security, and proposed structure. Guidance is provided on the key aspects which should be covered in the credit application. The extent to which goods and receivable are controlled and whether a fully structured self-liquidating facility or partial structure is proposed need to be carefully positioned. A ‘self-liquidating’ facility focuses on the integrity of the structure to transfer the primary source of repayment away from the client and capture of the sales proceeds by the financier. The role of the transactional control matrix, which translates the requirement for a risk-mitigating financing structure into an operationally viable process, is described. The key aspects of trade and receivables finance agreements are highlighted.