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Accounts Receivable Purchase
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Introduction
Account Receivable Purchase (ARP) is a trade solution to cater for the seller's domestic or overseas sales to their buyers on open account terms.
By entering into Receivables Purchase Agreement, the seller assigns the rights of the receivables to the Bank.
The Bank to discount the receivables and prepay to the seller. Upon due date, the buyer will pay directly to the Bank.
Benefits to Buyer:
- Buyer have better negotiation power to demand for rebate /discount.
- Stretch Working Capital Cycle with extended payment terms. Thus improved liquidity for buyer's working capital.
- Supplier access funding lead to stronger buyer-supplier relationships.
- Buyer use their financial strength as competitive advantage to stretch Working Capital cycle.
Benefits to Supplier:
- Improve efficiency & funding growth. Suppliers can receive payment from the Bank immediate and no longer to wait for buyer to pay them at invoice due date.
- Suppliers are no longer hampered by their credit ratings. The finance facility is based on the strength of the buyers business
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