Meaning
French security mechanisms allow companies to pledge or transfer their accounts receivable to a bank to secure financing. A dailly assignment enables a business to transfer its commercial invoices to a lender in exchange for immediate cash advances. The transfer is executed through a standardized deed called a bordereau.
It is widely used in corporate trade finance to optimize working capital.
Receivable Transfer
Companies provide the bank with a list of invoices that represent outstanding trade debts from their customers. Through the dailly assignment, the bank becomes the legal owner of these receivables. The company must notify its debtors if the bank decides to collect the funds directly.
Funding Execution
Banks advance a percentage of the assigned invoice value to the company as short term financing. This advance provides immediate liquidity to cover payroll and supplier payments. The bank collects the full amount from the debtor when the invoice matures.
Legal Protection
Lenders gain a high level of security because the transfer is enforceable against third parties upon delivery of the deed. The process protects the bank from competing claims by other creditors of the borrower. It remains effective even if the borrower enters bankruptcy proceedings.
