How it works
Origination and Opportunity Assessment
Origination and Opportunity Assessment
Aronova does not originate funding opportunities, but we do help originators quickly and accurately assess potential funding opportunities.
The seller is asked to provide a one-off file of current and historic receivables data, which we automatically DUNS match and augment with various forms of third-party data.
Using sophisticated data analytics and decisioning AI, we then produce a PASS report – an automatically generated PDF analysis covering historic receivables performance, debtor and debtor group credit risk assessment, aggregations and concentrations, timeseries analysis and trial eligibility calculations.
The PASS report is an essential tool for deal originators, helping quickly get to go/no-go funding decisions and maintaining deal momentum.
Daily Funding Program Operations
Daily Funding Program Operations
There are many different forms of receivables-backed working capital program, each requiring different levels of receivables data granularity, and each supporting different funding cycles.
We are generally involved in daily funding programs, where funding is determined by assessing the eligibility of individual invoices and each eligible invoice is sold on a true-sale basis to a bank or funding vehicle.
After the end of each working day, the seller sends us an electronic file of detailed receivables data, which we process before the start of the next working day. This file establishes which previously sold receivables have been repaid and also forms the basis of the next pool of eligible receivables for sale.
Eligibility often includes verification against debtor credit limits, which could be provided by an insurer, or which some insurers authorise Aronova to self-calculate using a combination of credit agency data and seller payment experiences.
Depending on transaction party requirements, Aronova will often reconcile cash arriving in a lockbox, price the sale of each eligible receivable and optimise which eligible receivables to sell. The cycle might culminate in the issue of cash transfer instructions to a cash manager.
SPV-style receivables funding model
The following illustration tracks a typical receivables-backed working capital program, where the seller provides a daily file of receivables. A new pool of eligible receivables is generated each day and an advanced amount is paid when an eligible receivable is sold. A deferred amount is paid when a previously sold receivable is repaid.
In this example, the program manager controls the advance rate and today’s cash available for new purchases. Both of these will ultimately determine which eligible receivables can be sold. For a purchase to occur, the transaction must first pass a borrowing base test.
