INSURANCE-BACKED FINANCING
Insurance-Backed Financing
Insured receivables are easier for lenders to value as collateral. Adding trade credit insurance may improve financing terms (terms are at the lender's discretion). We advise on everything from designing the insurance to coordinating with partner lenders.
01 — INSURED ABL
Insured ABL (Asset-Based Lending Against Receivables and Inventory)
We combine trade credit insurance with lending secured on receivables. Assigning the right to claim under the policy to the lender may raise the collateral value.
FOR LENDERS
For lenders offering ABL
We also arrange cover for the credit risk on receivables taken as collateral, and adjust deductibles and the insured percentage at renewal. We can also discuss insurance on the receivables-backed loan itself (the borrower's failure to repay).
02 — FACTORING & SECURITISATION
Factoring and Securitization
Insured receivables are sold to a lender or SPC and turned into cash before maturity.
For receivables from overseas buyers, invoice discounting on a non-recourse basis by a financial institution is also an option.
Taking receivables off the balance sheet may improve financial ratios (please confirm the accounting treatment with your auditor).
03 — COMPARISON
Compared with Guarantee Factoring
Guarantee factoring
Trade credit insurance
Scope
Buyer by buyer
Can cover all buyers
Cost
Guarantee fee per buyer
Annual premium (some products offer a no-claims rebate)
Financing
Must be arranged separately
Insured receivables can be presented to lenders
04 — IN PRACTICE
Three Things We Check in Practice
Insurance-backed financing works only if the policy matches what the lender requires.
The receivables
We check the size of the receivables, payment terms, the debtors' creditworthiness and any conditions on assignment.
The insurance terms
We design the covered debtors, credit limits, insured percentage, deductibles and causes of loss to fit the financing purpose.
Coordination with the lender
We confirm the lender's collateral requirements and the assignment or pledge of policy proceeds, and coordinate with the insurer.
FAQ
Frequently Asked Questions
What kind of lenders can you introduce?
We introduce partner lenders that offer receivables-backed lending (ABL) or factoring. We do not lend or buy receivables ourselves, and whether we can make an introduction depends on the transaction.
Will credit insurance improve our loan terms?
It may, but we cannot promise it. Terms depend on the lender's credit review.
Can we use a credit policy we already have?
Possibly, if it meets the lender's requirements, such as assignment of the policy proceeds. Assignment requires the insurer's consent.
We are happy to talk even at the stage of deciding whether insurance-backed financing suits your company.
Contact usFor financing, we introduce partner lenders; we do not lend or buy receivables ourselves. Credit decisions are made by the lender.