Buyout of Receivables


Receivable Buyout with recourse aims to provide working capital finance by converting domestic receivables into cash, thus, helping companies to tide over constraints of cash flow and working capital. Under the scheme, Bank only providing advances to suppliers (with large pool of receivables) against domestic trade receivable (age of receivables should not exceed 90 days) and other services such as debt collection and administration of sales ledger etc. shall be taken by the company.

Supplier/Borrower shall draw bills of exchange/invoice for goods supplied and the purchaser shall accept the same. After acceptance of bills of exchange/invoice, Bank shall advance discounted value of the receivable for the tenor of the receivable. If purchaser fails to pay the due amount on due dates, the supplier shall make payment. Borrower/Supplier Company shall submit list of receivables confirming that the documentary proof are with the company. An agreement would be entered into with supplier for assignment of the debts before providing advance. Supplier/Borrower should also enter into agency agreement for collection of debts with the Bank.