Novapproach's Solutions
Innovative and sustainable finance approach to our clients’ working capital needs
Receivables Securitisation
Securitisation is a mechanism for companies to raise capital against portfolios of receivables. Typically, the receivables are sold to a Special Purpose Vehicle (SPV) on a non-recourse basis. Using the receivables as collateral, the SPV is structured to issue Investment Grade notes to raise funds for the company.
Securitisation brings a range of benefits, including:
- Committed funding at a lower all-in cost of funds
- Liquidity maximisation
- Diversification of funding sources
- Minimal restrictive and financial covenants
- A solution in which other assets are unencumbered
- Risk mitigation
- Potential for off-balance sheet treatment
Revolving Process Flow
Special Purpose Vehicle (SPV)
Novapproach Solutions has the expertise to:
- Limit Ineligible Receivables
- Minimise Reserves
- Achieve a high Advance Amount
Also, Novapproach Solutions can facilitate the structuring of mezzanine and junior notes for incremental funding and off-balance sheet treatment.
Tokenisation and Decentralised Finance (DeFi)
The growth in digitalisation of trade through Distributed Ledger Technology (DLT) is bringing transparency, funding source diversification, increasing liquidity, sustainability and cost efficiency to securitised finance.
This technology is delivering new concepts:
- Blockchain networks have permitted companies to share openly information on their trades, on a single data network across counterparties, allowing equivalent visibility and verification
- DeFi, linked to Blockchain, has seen exponential growth recently, providing securitisations a better access to new and diverse sources of finance
- The use of Smart Contracts has permitted digital representation of contract terms, increasing speed, accuracy and reducing costs
- Tokenisation has provided a secure currency for trading real world assets issued through Blockchain
Novapproach Solutions has the expertise to assist its clients navigate and leverage this evolving technology.
Alternative Receivables Finance
A trade receivable securitisation may not always be the most efficient funding solution.
Alternative Receivables Finance is best considered when:
- The receivables pool is composed of a small number of Buyers
- The overall receivables pool is too small to justify the costs of a securitisation
- The invoicing jurisdictions are unacceptable to securitisation lenders
- The time to execution is more important than the transaction pricing
- A company wishes to monetise inventory or other assets with its receivables
In such cases, Novapproach Solutions may assist in arranging other working capital solutions including:
- With or without recourse factoring
- Single obligor receivables purchase facilities
- Asset-based loans
Supplier and Payables Finance
Supplier and Payables Finance is a means of using the credit strength of a Buyer to obtain cheaper finance for its weaker Suppliers.
Product as a Service Finance
The treatment of a product as a service, for financing, brings a range of benefits.
For the Buyer
- It allows the Buyer to pay over a longer time period
- The products purchased are treated as an accounting expense rather than as an asset and a payable
For the Supplier
- The products are treated as an accounting sale and removed from the Supplier’s balance sheet
- The Supplier does not need to fund the extended payment terms
For both the Buyer and Supplier
- It is an unsecured facility with risk mitigation through credit insurance
- The related products are not used as security for the funding
- It offers an effective alternative to lease finance