Sell receivables on an ongoing basis with forward flow.

The forward flow principle is worthwhile for companies that are constantly grappling with payment defaults, e.g. telecommunications providers, online retailers, public transport operators or energy utilities. But it is also an attractive solution for banks. 

A forward flow agreement is a purchase contract within the scope of which receivables portfolios are sold and transferred at set intervals over a specific period. The time frame and intervals at which the seller transfers the receivables packages to the buyer are agreed in advance. The price is a percentage of the nominal value that is calculated beforehand and applied to all receivables transferred.

With the help of a forward flow agreement, companies can permanently reduce their inventory of overdue receivables and banks can keep their NPL (non-performing loans) ratio at a consistent level. In both cases a forward flow agreement ensures that outstanding receivables are turned into fresh liquidity at regular intervals. 

In the context of the total receivables volume, both parties save a lot of time and coordination effort through a forward flow agreement. Instead of having to start new negotiations for each receivables package, the terms and conditions only have to be determined once. Ideally they will then form the basis for a long-term partnership based on trust and ensure the optimization of the seller’s processes.

• Consistently low NPL and receivables inventories
• Planning certainty in liquidity management
• Save resources in accounts as well as in dunning and legal departments
• Long-term partnership and therefore reduced coordination effort

A forward flow agreement works in a similar way to the traditional sale of receivables. The deal can be completed in just a few steps: