Why did Knorr-Bremse, a German manufacturing and services company with a 'rock-solid' balance sheet and no immediate need for additional financing, put in place a receivables finance solution?
The answer, according to Rainer Gerstung, Senior Manager Corporate Finance & Treasury, was to be ready for whatever shocks the post-Covid economic climate might bring. In a classic case of 'fixing the roof while the sun shines' the firm wanted to have access to additional funding in place before it might need it.
Gerstung decided to work with CRX Markets, whose working capital platform integrated smoothly with the firm's existing SAP ERP, allowing multiple banks to compete to fund individual debtors made available for financing by the firm.
Tim Kallenborn, Head of Sales at CRX Markets, pointed out that all the funding banks had agreed to sign the same Master Receivables Purchase Agreement (MRPA), which hugely simplified the arrangement. While the Knorr-Bremse programme is funded by banks, CRX Markets has also brought specialist non-bank funders into similar programmes for other clients.
For Knorr-Bremse, recievables finance forms part of an integrated working capital strategy which also includes reverse factoring. For Gerstung, its great benefit is optionality - Knorr-Bremse may not need the extra liquidity today, but it has the facility to scale up its factoring very quickly should markets conditions worsen.
Rainer Gerstung and Tim Kallenborn were speaking at the latest online event from the Working Capital Forum. You can watch a recording of the webinar here.