The purchase of accounts receivable involves the Bank buying accounts receivable possessed by the seller (creditor) against the buyer (debtor) under the commercial contract; and meanwhile maintaining recourse to the debtor.

Benefits of Account Receivables Purchase

• Stronger balance sheet structure
• Better management of assets
• Alternative way of raising funds
• Can enhance earnings by enabling proceeds to be reinvested into productive assets
• May assist with problems of capitalisation
• Differs from factoring in that the relationship between the corporate and debtor is maintained
• Relatively simple to administer and operate

• Seller and SMBC group enter into a Purchase Agreement
• SMBC group purchases receivables periodically from Seller and pays cash
• Seller continue to collect receivables from the Obligor as the Servicer
• Seller reports to SMBC group on collection from time to time