January 2023
At the end of 2020, MDAX-listed Knorr-Bremse AG, the global market leader in braking systems for rail and commercial vehicles, became the first client to launch a multi-bank, true-sale receivables sales program (Factoring) via the CRX Marketplace. Since then, many other corporate clients from various industries have benefited from this innovative solution, which can be described as a world first. In 2022 alone, financing in the amount of several billion euros was processed via undisclosed sales of receivables on the CRX Marketplace.
The reasons for the continued increase in demand are multifold. Companies are still suffering from the latest global economic crisis. The war in Ukraine and subsequent energy crisis, the prolonged effects of the COVID-19 pandemic, the ongoing struggle facing supply chains and the abrupt increase in interest rates combined create enormous challenges for companies. Despite having a solid financing plan and thoughtful decision-making, financing security seems more important than ever. In this context, working capital finance through the sale of receivables is becoming increasingly important.
Depending on the objective and the client or supplier structure, the sale of individual debtors or entire portfolios is possible. Initially, companies were able to sell individual debtor risks via the CRX Marketplace. In the final quarter of 2022, thanks to the continuous development of our solution, CRX Markets was able to take over the complete technical processing of a undisclosed, non-recourse and revolving sale of a securitized receivables portfolio for a major global corporation in the automotive industry.
Various ERP systems are connected via a technical infrastructure, debtor portfolios are extracted, the selection criteria of the respective financing partner (so-called eligibility criteria) are checked fully automatically, and the portfolio is then purchased by a financing partner, for example via a special purpose vehicle (SPV). All relevant transaction data is then uploaded via the technical interface and exchanged with the financing partner. The data is synchronized via the CRX Marketplace to automatically process the purchase of the offered receivables as part of the portfolio transactions. In addition, the solution features standardized reporting and an overview screen for displaying the line items in the portfolio, including their status.
During the expansion stage, the booking of all reserves and fees, as well as the non-recourse disposal of receivables in the portfolio, can be fully automated. This is particularly important in the case of a undisclosed and non-recourse sale of receivables, as the dunning procedure remains with the corporate client, but at the same time a correct accounting allocation is crucial for the balance sheet disposal (true sale). The corporate client can choose whether the portfolio is financed in a securitization structure (ABS/ABCP) or a factoring structure.
The added value for corporate clients of processing such a transaction via the CRX Marketplace lies, in addition to the technical solution explained, in the global scaling options of a receivables sale program. By separating the technical infrastructure from the financing, companies can flexibly decide with which financing partner they want to work, for example, in which jurisdiction, country, region or currency, and whether they want to put them in competition with each other or engage in active wallet sharing.
Furthermore, in a portfolio transaction, there is the option of triggering individual debtors to sell single debtor receivables directly to other financing partners to optimize pricing. Trade credit insurance can also be flexibly included in the various structures. In addition to the companies, the financing partners also benefit as they can focus on risks in which they are competitive and for which there is an appetite for credit.
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