A Proposal For The Securitization Of SMEs Receivables And/Or Cash Flows By Combined Financing

Abstract

The expression credit is the name of the game is becoming more relevant as financing credit sales is increasingly becoming a challenge for small and medium-sized enterprises (SMEs) in Mexico. The securitization of receivables, also called monetization, helps to address the challenges of obtaining cash to finance new receivables. SMEs have to be able to offer credit and the securitizations allow them to do this by using the receivables they already have to obtain more cash to help them finance new sales.

This paper presents the literature that supports this proposition, as well as a model that allows for the restructuring of revolving and non-revolving financing tools for SMEs. The proposed model enables multiple SMEs to combine their receivables into one master trust and use their collective receivables as collateral for loans.

During an exhaustive literature review, theories and isolated arguments were found that support this proposal. The proposal intends to generate an all-round win-win scheme through which 1) the SMEs can obtain financing at a reasonable cost, 2) the investors can gain the opportunity to diversify their portfolios, and 3) the Mexican government can gain the opportunity to channel support to productive initiatives in the country.

On a theoretical level, the results of the proposed solution could make an innovative contribution to the cognitive area of structured finance. Further, the possibility of combining the securitizations of many different SMEs to finance new receivables with their actual receivables could be valuable for the development of companies on a practical level.