The problem with supply chain finance schemes that if the buyers’ credit is rated BBB or lower then quite often the banks providing the schemes are not interested. And, Basel III requirements will probably make them even less interested. Fortunately, there are dynamic discounting platform alternatives for payables, e.g. C2FO, and for receivables, e.g. The Receivables Exchange.
In June 2013, a new platform from Aztec Money began operations, focusing on providing access to non-Bank capital for exceptional export companies in developing or credit constrained markets with high quality debtor counter-parties via their platform.
Aztec Money platform
The platform links Sellers of Receivables (Corporates, SMEs and Banks) to Buyers (Institutional Investors, Insurers, Private Wealth and Banks). Aztec Exchange and Aztec Money together form a global multi-lingual origination, processing and auction platform.
Aztec Exchange can also originate and structure invoice-backed assets for buyers through off- balance sheet special purchase vehicle (SPV), owned and managed by the bank. Investors buy credit notes in the SPV which in turn buys receivables uploaded to Aztec Exchange.
Only an Internet connection is required to access the multi-language portal. Suppliers can upload any invoices they wish to sell. Each supplier can request an advance of up to 99% of the face value of its invoices, with any remainder due to the supplier at final settlement (paid by the corporate buyer). Prior to sale of its receivables, the supplier sets the financing fee it is willing to pay an investor for each 30-day period, typically 1% and 2%. Aztec Money has no hidden charges. They only charge a processing fee for successful transactions (2%), and there are no other fees.
The auction process is as follows:
- corporate registers on Aztec Exchange
- supplier sets the financing fee it is willing to pay for each 30-day period
- Aztec runs auction matching buyers and sellers
- Aztec manages all the administrative and process elements of a sale, including settlement via their global payment partner.
Aztec currently has processing centres in Dublin (for EMEA) and New York (for the Americas) with one planned for Manila (for Asia Pacific). The company also has representative offices in Ghana, Asia and throughout Europe as well as one slated to open shortly in Latin America.
Aztec also offer the facility for funding buyer’s suppliers to ensure they as well improve their working capital too.
Aztec’s move into the receivables financing market for SMEs in the developing markets is important and very welcome. Dynamic discounting platforms offer more flexibility and penetration of the supplier/base base than the typical single bank funded Supply Chain Finance programmes. In the long run, will the single bank SCF programmes survive?
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