How big does a company need to be to securitize its receivables?

There is no single threshold. What matters is whether the receivables can carry the credit, usually through credit insurance, and whether the program can run without large fixed costs. Invoice Ledger runs the program for you, which is what makes it practical for mid-market companies.

Do I need a treasury team to run a securitization?

No. Invoice Ledger runs the program end to end: verification, reconciliation, eligibility, reporting and renewals. Your part is a one-time review of your AR workflow, then invoicing as usual.

What does it save compared with factoring?

Illustratively, a company financing $8M a year through factoring at about 16% pays roughly $1.28M; at a cost of capital 6 to 8 points lower it keeps $480K to $640K a year. Your rate depends on your insurer, customers, terms and volume.

Can a mid-market company securitize its receivables?

For a long time the honest answer was no. A company that wanted to securitize its receivables needed teams of lawyers, a bank arranger and an in-house treasury to run the program. Mid-market companies that sold on credit terms funded their receivables lower down the ladder, through factoring, asset-based lenders or a bank line, and paid more for it.

Their receivables were rarely the problem. The obstacles were cost and work.

What kept mid-market companies out

Fixed setup cost. Structuring, legal opinions, the special purpose vehicle and investor documentation cost much the same for a small pool as for a large one.
Underwriting many customers. Funders had to get comfortable with every customer in the pool. For a company with hundreds of customers, that was a long and expensive process.
Daily operations. A program needs every invoice verified, cash applied and reconciled, eligibility and limits tested daily, and reports sent to funders. Large companies have treasury teams for that. Most mid-market companies do not.
Minimum sizes. Bank conduits and investors set minimums that left most mid-market books out.

What has changed

Credit insurance carries the credit. With customers covered by trade credit insurance, funders can rely on the insurer instead of underwriting each customer. See how that works.

Automation carries the work. Verifying invoices against the accounting system, applying cash, testing eligibility and producing insurer and investor reporting are now software, not headcount.

Someone else runs it. The company does not need to build a treasury function. The program is run for it, end to end.

What you need

Business customers on credit terms, invoiced from an accounting system or ERP, for example QuickBooks, Xero or NetSuite.
Customers a credit insurer will cover, or a policy you already have.
A collection account your customers pay into.
A one-time review of your AR workflow to close gaps, such as invoice confirmations or how credit notes are issued.

What the process looks like with Invoice Ledger

Get your rate. Tell us about your receivables and we come back with an indicative rate.
Review your AR workflow once, together. We look at how invoices, credit notes and collections flow today and close any gaps with you.
We set up the program. Credit insurance placed or reused, the structure and legal documents, the investors and the collection account.
Funding starts. Eligible invoices are funded, up to 90% depending on dilution.
It runs. We verify every invoice, reconcile collections, test eligibility and limits every day, report to the insurer and investors, and handle every renewal. You keep selling.

What changes for your team, and what doesn't

What stays the same: you sell to the same customers on the same terms, invoice them from the same system and keep every customer relationship. Credit decisions on new customers still sit with you, guided by your insured limits.

What changes once: customers are asked to pay into the program's collection account, and any gaps in how invoices, credit notes and confirmations are handled are closed during setup.

What you stop doing: chasing funding, rebuilding borrowing base certificates, reconciling advances by hand and preparing lender reports. The program's daily work, from eligibility tests to insurer and investor reporting, is done for you.

Questions to ask any securitization provider

Who funds the program? Banks, insurers or capital markets investors should stand behind a structure built for your receivables.
What do you run, and what is left to my team? Insurance, legal, investors, verification, reconciliation, eligibility, reporting and renewals all need an owner.
How is the advance rate set? It should follow your dilution and your insured limits, not a flat number.
What happens at renewal? A program is only as good as its next cycle; ask who handles it.
What does it cost all in? Compare the annualized cost of capital, not a per-invoice fee.

Is it worth it?

Take a company that finances $8M of receivables a year through factoring at about 16%. That is roughly $1.28M a year. At a cost of capital 6 to 8 points lower, it would keep $480K to $640K a year in the business. These figures are illustrative; your rate depends on your insurer, customers, terms and volume. Model your own book or get your rate.

For how the structure works under the hood, read what accounts receivable securitization is.