Expected Date Affects Reserve

IMPORTANT:- Some links in this article will only be accessible to authorised Members that have logged into the Exchange Trade Centre

When using Upload Revolving ETR (or opening any Trade), the date entered in the Expected Date is very important and should be clearly understood. The Exchange calculates the daily Discount using the payment date entered in the Expected Date field, i.e. if an Originator estimates their Debtor will pay in 60 days and the ETR is Settled (i.e. paid in full by the Debtor) in 55 days, the Exchange still calculates the daily Discount for the entire 60 days.

The Originator should carefully consider, and give their best estimate of, when a particular Debtor will Settle a specific ETR. When creating a Debtor on the Exchange Trade Centre, setting blanket terms of 90 days may reduce/remove the red warnings that appear on the Overdue Now column in the Exchange Trade Centre | Transaction Statement (that affects the release of any Reserve as documented in the Overdue Policy), but may also increase the cost of funds to the Originator.

As explained in the Credebt Exchange® Low Cost Capital information leaflet, the Exchange is a fast moving, liquid market and confirmed RSA Offers to Originators means that specific funds are allocated to that Originator. The funds are allocated based on:

  • Total Low Cost Capital required (to meet their working capital requirements)
  • The Day Sales Outstanding [DSO] value specified by the Originator

An Originator that requires working capital of €1.0m with a DSO of 45-days will require ½ the funds allocation that an Originator with a DSO of 90-days requires. Credebt Exchange® is charged with operating an equitable trade balance between the demand from Investors and the supply from Originators. Over allocation to an Originator undermines the Exchange’s ability to maintain its equitable trade balance.