Trade receivables securitisation: Tapping the next phase of liquidity in structured SCF

Manu Prakash (pictured), Managing Director and Head of Lending at CredAble, explains why securitisation offers a viable solution for accessing finance today, in a politically and economically unstable environment.

In an increasingly distributed supply chain economy, speed of accessing capital is becoming more precious than cost of capital. From tariff tensions disrupting US$9.7tn in trade finance, persistent interest rate volatility, fragmented supplier networks, and tightening monetary cycles, the dynamics of global trade are entering a decisive new chapter.
It is in this backdrop that trade receivables securitisation (TRS) is experiencing a strategic resurgence. Once confined to the domain of large, investment-grade corporates in developed markets, TRS is evolving into a more dynamic, programmable capital solution.

From Balance Sheets to Capital Markets: A Shift in Liquidity Thinking
Receivables finance is not new. But what makes this moment different is the institutional recalibration of short-duration liquidity from a bank-led transaction to a capital markets product. At its core, TRS involves pooling future cash receivables such as invoices or trade receivables and converting them into marketable securities. These securities are sold to investors through Special Purpose Vehicles (SPVs), providing businesses/investors with immediate liquidity while transferring credit risks to investors.

This allows businesses to convert pools of trade receivables into asset-backed securities (ABS), shifting exposure off their balance sheet while accessing deep-pocketed investors seeking predictable, real-economy cash flows.
Trade receivables now make up 32 per cent of the collateral in European multi-seller asset-backed commercial paper (ABCP) conduits, signalling their centrality in short-term structured credit. The resilience of this segment stands out. Even as S&P forecasts overall European securitisation volumes to remain stable at €135bn in 2025, trade receivables ABS are expected to outperform due to their short maturity, self-liquidating nature, and granularity; characteristics that offer built-in risk diversification and a strong buffer against rising default rates.

Fifteen per cent of trade financiers globally believe TRS will have the highest growth potential within their organisation, bumping more typically user-friendly services such as factoring (11 per cent), asset-based lending (9 per cent), and dynamic discounting (6 per cent) down the pecking order.

Institutional Appetite is Rising and Reshaping the Structure
Overall, the private credit market has grown exponentially, reaching US$1.6 trillion in assets under management (AUM) globally, with allocations increasingly shifting towards structured finance products that offer low duration, high predictability, and embedded risk enhancements. TRS offers precisely this.
Germany’s leading bank’s recent US$3.5bn synthetic trade receivables securitisation (TRAFIN 2023-1) marked the fifth iteration of its kind; underscoring how institutional portfolios are evolving to accommodate trade-linked exposure, while using first-loss tranching, performance-based triggers, and synthetic credit default protection to mitigate risk.
We further note that the strength of trade receivables ABS lies in their adaptability across cycles, making them a preferred structure for investors seeking resilience amid macro uncertainty. While default rates in other ABS classes show mild upticks in their base-case scenarios for 2025, trade receivables-linked programs are forecasted to retain stable ratings, supported by dynamic replenishment mechanisms and diversified obligor pools.

The India Lens: Building Depth in a High-Potential Market
India’s securitisation volumes touched INR 1.88 lakh crore (US$22.5bn) in FY24, which was historically dominated by mortgage and retail loan pools. The market is now gradually expanding into trade receivables covering 15 per cent in total issuances (Q3 FY24) up from 8 per cent in line with growing adoption of invoice discounting in India powered by digitisation, anchor-led financing models, and regulatory tailwinds.
India’s securitisation landscape has evolved significantly; from the RBI’s early guidelines focused on investor protection and true-sale norms to today’s dual regulatory framework led by both RBI and SEBI.
RBI’s 2022 revision of the Securitisation of Standard Assets Directions, which introduced clearer definitions, minimum holding periods and investment size, along with strengthened criteria for risk retention and asset quality enhancing structural robustness.
This dual regime has deepened market participation, enabling fintech-originated MSME receivables to be securitised through both private PTC structures and listed ABS instruments.
While the RBI ensures structural integrity through risk retention and asset eligibility norms, SEBI brings transparency and market access—together laying a strong foundation for trade receivables to emerge as a scalable, institutional-grade asset class.

Key Benefits for participants
– Liquidity Optimisation (Investor/ Originator): Immediate monetisation of receivables frees up working capital.
– Cost Efficiency: Securitisation often provides funding at lower costs compared to traditional loans.
– Risk Diversification (Investor): By isolating receivables into SPVs, businesses can shield themselves from customer defaults.

CredAble’s partnership with Northern Arc’s invoice-backed ABS debut marked a watershed moment demonstrating how fintech-enabled MSME receivables, when backed by anchor payment data and digital origination, can deliver a performance profile acceptable to institutional investors.

Why It Matters: TRS as a Hedge Against Global Fragmentation
The context is shifting rapidly. With reciprocal tariffs and rising protectionism environment, corporate supply chains need more than just liquidity; they need liquidity that is resilient, jurisdiction-agnostic, and decoupled from traditional bank intermediation.
TRS delivers on this by enabling cross-border receivables monetisation without exposing corporates to balance sheet bloat or FX mismatches. When combined with digital invoice infrastructure and interoperable reporting standards as seen in India (GSTN), the UAE (e-invoicing), and the UK (open banking APIs), TRS becomes not just scalable but programmable.
This is no longer just financial engineering. It’s market infrastructure.

The Road Ahead: From Structured to Institutional
While terms like tokenisation and embedded finance often dominate future-facing narratives, the most impactful evolution in TRS will likely be institutional—not technological.
Here’s what’s unfolding:
• ESG and sustainable TRS are emerging themes as European structured finance market saw a renewed surge in green and social-labelled securitisations, reaching over €5bn, including first-time solar and data centre ABS deals. As ESG mandates grow stronger, institutional appetite is expected to expand into climate-aligned trade receivables pools, particularly those linked to sustainable supply chains and clean-tech procurement.
• Standardisation of documentation and performance reporting across jurisdictions is enabling faster investor onboarding and smoother structuring for cross-border programmes.
• Expansion into mid-market and SME anchors is accelerating, driven by fintech platforms and DPI-led digital onboarding infrastructures.
• Increased regulatory clarity in emerging markets; especially in India and Southeast Asia is enhancing investor comfort and enabling broader risk participation.
Rather than betting on futuristic abstraction, market leaders are focused on tightening execution, broadening eligibility pools, and de-risking at scale.
“The relative stability of trade receivables ABS is underpinned by their simplicity and adaptability”, a powerful reminder that sophistication in structured finance often comes from mastering fundamentals.

Conclusion: A Strategic Pivot for a Real-Time Economy
As the world navigates an era of capital scarcity and cross-border uncertainty, the case for transforming working capital into a structured, scalable, and tradable asset class has never been stronger.
Trade receivables securitisation is no longer a tactical funding option. It is a strategic operating model—one that empowers corporates to self-fund growth, gives investors access to real-economy alpha, and redefines how liquidity flows through the arteries of global trade.
For businesses, banks, and capital allocators ready to think beyond balance sheet constraints, TRS is not just the next phase of structured finance. It is the foundation of a more resilient, data-driven financial architecture.