Private credit funds increase exposure to receivables finance assets

Private credit funds are increasing their exposure to receivables finance and other short-duration working capital assets, as investors seek stable returns in a higher interest rate environment.

Market participants report growing interest from institutional investors in receivables-based financing, including invoice finance, factoring and asset-based lending structures. These assets are typically backed by short-term trade receivables, offering predictable cash flows and relatively low duration compared with other forms of private credit.

The trend is being supported by continued demand from businesses for flexible working capital solutions, particularly among SMEs and mid-market companies facing tighter bank lending conditions. As a result, non-bank lenders and specialist platforms are increasingly relying on private credit funding to support origination and portfolio growth.

Funding structures such as warehouse facilities and forward-flow agreements are enabling investors to gain exposure to receivables portfolios, while allowing lenders to scale their operations. These arrangements also support risk distribution across multiple parties, including asset managers, funds and financial institutions.

Industry participants say the asset class is attracting attention due to its potential for diversification and resilience, although recent market events have reinforced the importance of robust underwriting, transparency and collateral verification.

As private credit continues to expand into working capital finance, receivables-based assets are expected to remain a key area of growth, bridging the gap between traditional bank lending and alternative finance provision.