NEW ORLEANS and DETROIT — Cash-strapped automotive suppliers can now access $15 billion in competitively priced private institutional capital through a new online marketplace designed for real-time trading of accounts receivable.
The Receivables Exchange, the world’s first online marketplace of its kind, said it will focus its efforts in the coming months on helping the nation’s more than 4,000 automotive suppliers gain the liquidity they need for continuing operations. By selling their receivables on the Exchange’s open and competitive auction trading platform, auto suppliers will be able to realize funding in as little as 24 hours, a significant reduction from the current 45-60 day payment cycle, according to the company. This move is in response to the recent announcement of the Obama Administration’s Supplier Support Program, in which currently only Tier 1 suppliers are able to take part in the government funded program.
Founded in 2007, The Receivables Exchange marketplace enables the entire supply chain to participate, allowing Tier 1, 2 and 3 auto suppliers to increase their liquidity by selling their receivables to major institutional capital providers. Through The Receivables Exchange’s proprietary trading platform, auto suppliers are able to quickly and easily sell their accounts receivable by posting their outstanding invoices to be bid on in real-time by a global network of accredited institutional investors.
“We hear from capital providers every day who are eager to invest in auto suppliers’ receivables,” said Justin Brownhill, co-founder and chief executive officer of The Receivables Exchange. “We applaud the government’s Supplier Support Program as a great first step; unfortunately, it leaves out thousands of suppliers that desperately need access to cash today in order to be here tomorrow. At The Receivables Exchange, capital providers stand ready to help these cash-starved suppliers become better positioned to survive what is likely the worst financial crisis in history.”
Benefits of The Receivables Exchange for auto suppliers include:
1. Increased Liquidity – Access to cash in as little as 24 hours from the current 50+ day payables process
2. Complete Financing Control – Sellers (auto suppliers) set all auction parameters,
including minimum advance, maximum fee and auction duration. If a bid does not meet the Seller’s parameters, the Seller is not required to sell
3. Competitive Cost of Capital – Competitive real-time bidding by multiple Buyers drives down the cost of capital
4. Improved Debt Position – Receivables are sold as an asset versus traditional lines of credit which are balance sheet liabilities
5. Less Restrictive – Traditional lending institutions have restrictive covenants and liens on collateral, which can limit a business’, spend flexibility
Learn more about how to finance accounts receivables and supply chain-financing options for auto suppliers by going to www.receivablesXchange.com.
