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Implementation of a non-recourse factoring agreement for a Group's four entities in Europe
(France, Belgium, Germany, Spain) with later integration of an existing U.S. subsidiary for an Industrial Group
Group revenue: €2Bn
Total scope : €300M
Outstanding receivables : €50M
The AU Group team
Marc Delerue
AU Group Finance
Olivier Manissol
AU Group Lyon
Challenge adressed
A major group in the construction materials trading sector (€2Bn in revenue) sought to optimise its financial structure and reduce the impact of trade receivables on its balance sheet across four subsidiaries in Europes. The group also aims to anticipate the upcoming integration of a new subsidiary in the USA.
Key issue: The group aimes to unlock liquidity and reduce the impact of receivables on its balance sheet while maximizing financing within the constraints of its debt documentation.
- Role
- AU Group Finance was responsible for structuring the factoring program along with the crédit insurance program and supportingits implementation
- Duration
- 3 month
- Sector
- Trading of construction materials
Proposed solution
AU Group Finances proposed a non-recourse factoring agreement with a line of €50M based on confidential balance assignment, backed by a credit insurance policy held in co-insurance.
We worked directly with the group's treasury and receivables management teams to define the scope of receivables to be financed. A competitive bidding process was conducted to secure the best factoring conditions. Simultaneously, we collaborated with the group's auditors, ensure compliance with IFRS requirements and off-balance sheet treatment.
We obtained the necessary approval from the credit committee and coordinated with IT teams within the Group, the factor and insurer to achieve ensure a seamless integration of the receivables transfer processes
Ongoing support
Since the implementation of the solution
- We have maintained regular follow-ups with the client, the factor, and the credit insurer to ensure the solution meets expectations in terms of financing availability and credit limit levels
- We are expanding the programme’s scope to include the U.S. subsidiary (New total scope: €500M , €75M outstanding receivables).
- We are managing the renewal process with the factor and credit insurer to maintain optimal terms.
Our expert's opinion
The structuring of a non-recourse factoring programme, combined with a co-insured credit insurance policy, was instrumental in unlocking liquidity while minimising the impact of receivables on the balance sheet.
By ensuring full compliance with IFRS standards, this solution was ready to be extended to the U.S. subsidiary, enhancing global receivables management.
Marc Delerue, AU Group Finance
AU Group role & value-added contribution
We supported our client in defining the global solution and executing its operational rollout, including:
- Defining the scope of receivable transfers across four entities (eligible customer portfolios and receivables).
- Quantifying the financing leverage and eligible outstanding receivables to be derecognised from the balance sheet.
- Minimising recourse risk from the factor, in collaboration with the group’s auditors.
- Securing credit committee approval for the transaction.
- Supporting the group throughout the implementation of the factoring programme.
- Refining the credit insurance policy to maximise credit limits support and restrict the insurer’s recourse rights, in close cooperation with the auditors.
Results
A 15%
increase in receivables coverage
through credit insurance.
An additional financing lever of
€50M
for the European scope.
Pre-validation of the U.S. subsidiary integration, increasing the assignment and financing base by
30%
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We then support you in the implementation and daily management of the selected solution.
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