Trade Receivables Solutions

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2 Trade Receivables Solutions

Our Trade Receivables Solutions let you shorten your DSO

and extend the DPO of your Buyers, allowing you to;



Improve liquidity for you and your Buyers



Enhance your Balance Sheet working capital position



Increase competitiveness by extending Buyer

payment terms



Reduce credit risk by transferring to a third-party



Obtain attractive short-term financing

We offer a range of solutions tailored

to your needs.

DPO DSO

▼DSO

▲DPO

DSO = Days Sales Outstanding/ Receivables days DPO = Days Payable Outstanding/Payables days

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Are you the Seller or Buyer in the relationship that needs liquidity?

Receivables

servicing

Automatic payment reconciliations, reduced administration costs and improved data visibility.

Extension of Buyer

Terms

Increased payment terms to your Buyers without impacting your working capital or balance sheet.

Trade payables

financing

Buyers looking to extend their payment terms, to Vendors who do not offer such extensions.

Vendor financing

Buyers extended

payment terms and offers Vendors access to financing, based on the higher credit rating of the Buyer.

Distribution

Financing

Maximising benefits for all stakeholders by combining reduced DSO for Vendors and longer DPO for Buyers.

Factoring

Improve your cash flow by accelerating your cash collections and reducing your credit collection risk.

NO

YES

Seeking to

shorten DSO

or extend

Buyers’ DPO?

Will the Seller accept being legally involved? YES NO DSO DPO BOTH BUYER SELLER

Trade Payables Solutions

Trade Receivables Solutions

FUNDED

UNFUNDED

Do you need

to improve

liquidity in

your supply

chain?

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Factoring

▼ Vendor DSO

= Buyer DPO

Program

overview

Factoring allows you to improve your cash flow by accelerating your sales collections from a defined portfolio of Buyers.

 A Vendor sells their trade receivables to a Funder, at a discount, accelerating their cash inflows.

 The Funder assumes the credit risk and is repaid by the Buyer at the invoice due date.

GSCF works with you at every stage to understand your requirements and setup a program that matches your needs. If the program achieves “True Sale” accounting treatment, the Vendor can remove the factored receivables from their Balance Sheet.

Funders usually obtain credit insurance to cover their risk of Buyer default.

Benefits to

Vendor

 Improved cash flow

 Low cost short-term financing

 Balance sheet benefit – reduced DSOs

As well as all the benefits of Accounts Receivable Servicing (page 6).

Benefits to Buyer

Trading terms with the Buyer remain unchanged

Ideally suited to

Vendors with high-volume sales to a portfolio of credit assessable Buyers. Who are seeking to increase liquidity and reduce credit risk.

DSO Vendor

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Extension of Buyer Terms

= Vendor DSO

▲ Buyer DPO

Program overview

By offering your Buyers increased payment terms you _{can enhance Buyer relationships and increase sales.} The extension is Off-Balance Sheet; meaning no impact to your credit risk, Balance Sheet or working capital.

Benefits to Vendor

Enhanced Buyer relationships and competitiveness by _{offering increased payment terms}

 Timely settlement of receivables by Funder leads to predictable cash forecasts for Vendor

 Mitigated credit risk (transferred to Funder)

 Increased sales from Buyer liquidity benefits

 Off-Balance Sheet, does not impact your working capital.

Alongside all of the advantages from Accounts Receivable Servicing (page 6).

Benefits to Buyer

 Balance Sheet benefit - increased DPOs

 Enhanced Vendor relationship and competitiveness by receiving increased payment terms

 Improved cash flow

Ideally suited to

Vendors with high-volume sales to a portfolio of credit assessable Buyers. Who are looking to increase sales by offering attractive payment terms to their Buyers without impacting their own Balance Sheet position.

DSO Vendor

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Distribution Financing

▼ Vendor DSO

▲ Buyer DPO

Program

overview

Financing program sponsored by the Vendor for a selected portfolio of Buyers whereby

 The Vendor is paid earlier by the Funder

 Buyers obtain extended payment terms

Due to the large-size and complexity of this type of program, Funders and Vendors prefer to leverage GSCF’s expertise. GSCF has an extensive track record of setting up and managing Distribution Financing programs for large blue-chip companies.

If the program achieves “True Sale” accounting treatment, the Vendor can remove the factored receivables from their Balance Sheet.

GSCF manages the complete program including on-boarding of Buyers, credit and collections, and reporting.

Distribution Financing programs are typically credit insured depending on the size and risk of the portfolio.

Benefits to

Vendor

Enhanced Buyer relationships and competitiveness by offering Buyers increased payment terms.

 Improved cash flow with Balance Sheet benefit – reduced DSO

 Improved liquidity enables increased sales to Buyers

 Reduced credit risk (transferred to Funder)

 Timely settlement of receivables leads to more accurate cash forecasts

As well as all the benefits of Accounts Receivable Servicing (page 6).

Benefits to Buyer

 _ Balance Sheet benefit - increased DPO _{Enhanced Vendor relationship and competitiveness by} receiving increased payment terms

 Improved cash flow

Ideally suited to

Vendors with high-volume sales to a portfolio of credit assessable Buyers. Who are seeking to increase sales whilst maximising liquidity and reducing credit risk.

DSO Vendor

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Receivables Servicing

= Vendor DSO

= Buyer DPO

Program overview

Your company outsources its credit and collection tasks to GSCF, who then manages your complete receivables processing;

 invoice & credit note management

 reconciliation of Buyer payments

 management of individual Buyer credit limits

 collection of Buyers´ financial statements and performing credit analysis

 credit rating & monitoring of Buyers

 automatic alerts and notifications of due and late payments

 ensure compliance with credit insurance policy

Benefits to Vendor

Increase monitoring of Buyers and reduce credit risk

 Enhance credit & collections function

 Reduce admin tasks and costs

We can assist the Vendor to obtain credit insurance and using our systems can lead to higher coverage.

Platform and external communications can be white labelled per Vendor preference.

Benefits to Buyer

Trading terms with the Buyer remain unchanged.

Ideally suited to

Vendors with high-volume sales looking to streamline

credit and collection tasks whilst improving their risk management.

DSO Vendor

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Our software platform

Our proprietary technology platform offers

unparalleled flexibility and automation for

management of supply chain finance programs.

Some benefits include;



Multi-currency, multi-lingual platform designed

for your global requirements



Fully automated processing that reduces

administration costs and risk of manual error

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Credit limit approvals at Purchase Order stage

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Real-time payment reporting empowering your

business to make informed credit decisions



Technically integrated with Funders and credit

insurers for reduced administration and faster

credit limit approvals

Visibility

 Web portal so you can always access your

program information.

 Easy to understand, customisable dashboards at summarised and detailed levels.

 Identifies and notifies stakeholders of potential credit risks automatically.

Automation

 Automated notifications and alerts

customized to your requirements

 Real-time reconciliation of payments to invoices and available credit limits

 Credit limit requests automatically sent to approvers enabling faster processing

 Processing in accordance with credit

insurance policy conditions, always ensuring compliance

Ease of Use

 A system that points you in the right direction _{letting your people know what requires their}

attention.

 Extensive training from our multi-lingual operations teams located across Europe and the Americas.

Our in-house development team allows us to add further

individual features if required.

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Typical Program Cycle

1 Order Placement

2 Invoice and goods sent out

3 Vendor uploads invoice data to GSCF system

4 Invoices verified by Buyer

5 Report sent to confirm amount due to Vendor from Funder

6 Funds paid to Vendor by Funder

7 Report sent to Buyer confirming amount payable and due date

8 Buyer pays amount due to Funder on agreed terms

Notes

* By changing the timing of steps 6 and 8 relative to standard credit terms determines the improvement in DSO and DPO for Vendor and Buyer.

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FAQs

1. What type of Buyers could be considered?

GSCF can consider any type of Buyers, as long as they are credit-assessable and have an established relationship with the vendor, showing a good trading track record. Buyers in A/R based programs are typically distributors or resellers, although they can effectively be from any industry operating with open-account. GSCF recommends providing a well-diversified portfolio of Buyers that are not in distress.

2. Are programs disclosed or undisclosed to Buyers?

Programs can be structured to the preference of your company.

3. Is there a cap on the program size or number of Buyers involved?

There are no limitations in terms of program size cap or maximum number of Buyers involved in a program. GSCF can set-up and manage sizeable A/R-based transactions with a total program limit in the billions of dollars with hundreds of Buyers. GSCF has special features that assist large deals, such as participation management (for Funders that bring in participants) and watch-lists/scorecards/dashboards (for credit managers overseeing large portfolio of Buyers), amongst others.

4. What is GSCF´s experience with credit insurance?

GSCF has a vast and successful experience with credit insurance, having long-standing partnerships with the world-largest credit insurance companies. GSCF can help in both - structuring insured-programs, i.e. finding the right underwriter/s and assisting in the insurance policy drafting; and also servicing insured-programs, ensuring that the company stays compliant with the conditions of the policy at all times. Credit insurers appreciate the risk

management tools and transparency granted by GSCF´s processing and tend to have increased appetite on GSCF-managed programs.

5. How much will a program cost?

SCF programs are designed to be more competitive than short-term bank financing due to the lower level of credit risk taken by the financing party (Funder).

Program cost will be determined by:

 The term of financing required

 The level of credit risk involved for the Funder

 Possible use of credit insurance on the Buyer(s)

 Level of processing complexity involved i.e. multiple currencies/jurisdictions

 Legal setup costs (depends on country)

6. How long after sale of invoice can I receive payment?

A minimum of one week is needed, depending on the program Funder.

7. What is the accounting treatment of an A/R program?

GSCF can structure A/R-based programs whereby the Vendor (also called Seller, Originator or Vendor) sponsoring the program achieves “True Sale” of the trade receivables sold to the program Funder. This means that the A/Rs are taken off-balance sheet, allowing the Vendor to reduce Days Sales Outstanding (DSOs) thus enhancing its working capital and operating cash flow. It is worth noting that the accounting treatment will be ultimately defined by the company´s auditor and will depend on the applicable accounting rules.

8. Will there be a level of Vendor recourse required?

Typically there is a certain level of recourse to the Vendor required, but not always. This depends on the level of risk involved for the Funder. Where

recourse to the Vendor is required, GSCF’s structuring experts will work with your business to achieve “True-Sale” accounting treatment.

9. What information would you need from us during the program?

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10. What are the key milestones and timelines to implement a program? Below is a high-level overview of the steps leading to the successful implementation of an A/R financing program:

Initiation: Submission of A/R portfolio and collection of your financing requirements.

Structuring: GSCF reviews with its partner financing institutions, including credit insurance providers if required, and reverts with an indicative Term Sheet explaining the solution structure proposed for your consideration including:

 Credit limits for Buyers in the portfolio

 Terms of the program, including payment terms offered to Buyers

 Initial pricing estimate

 Conditions precedent to program activation e.g. Buyer financial statements

 Information required for a final offer

Process Definition: Once the Term Sheet is signed and we approach activation of the program, our Business Operations team collects your

reporting requirements and performs any implementations required in order to customize our platform and its capabilities to your specific needs.

Activation: Once the applicable agreements are executed, we will perform the final steps leading up to program activation, such as:

 Conduct technical discussions and perform testing for transmission of A/R data to GSCF’s platform.

 Perform onboarding of Buyers in the portfolio

 Conduct training sessions on using our web-accessible portal

 Set up user accounts and accesses to the program portal 11. How will GSCF support my business once our program has been

activated?

Upon setting up a program a dedicated Credit Operations team will be assigned to the program and will be responsible for activities such as

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