Accounts Receivable PUTS

An Accounts Receivable (A/R) PUT is a simple contract where a major bank agrees to buy specified accounts receivables at face value if the obligor files for bankruptcy.

A/R PUTS allow a Vendor to protect specifically against customers’ credit collapse, without affecting ongoing commercial relationships or regular payment processes. A/R PUTS also protect against the credit risk of a specific customer with potential credit or concentration issues, including distressed customers.

The Vendor pays a specified premium for credit protection on a designated amount of that obligor’s receivables during the contract term. A/R PUTS can be coordinated with other forms of receivables management, such as factoring or portfolio-based trade credit insurance. A/R PUT documentation is straightforward, based on standardized credit market terms. Coverage is available for public and liquid private companies.

A/R PUTS provide direct credit protection for underlying Accounts Receivable exposure, allowing the vendor to focus on what it does best - production and sales.

Tailored to the Vendor’s needs:

• Term - protection can be offered for various durations, from 6 – 60 months
• Size - protection can be offered for a scheduled amount $1 million to $100 million
• Obligors - protection available for most categories of receivable obligors (name specific)
• Protection Percentage – 100% of receivables insured
• Fast Payment – on same day of delivery of protected receivables
• Strong Counterparty – Major Global Bank

Flexible and Cost Efficient:

• No deductibles
• No cancellation provisions
• No limit reductions
• No need to insure entire Accounts Receivable portfolio
• No factor controls/intrusive procedures
• No notice to customer