Presentation of Securitisation of debtors

This query is : Resolved

Venkatesan Iyengar (Querist)
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07 August 2008 The company has securitied its accounts receivable and it has submitted the invoices raised by it to the Bank. ON that basis the Bank has advanced 85% of the invoice value under securitasation arrangement.

In the financial accounts to be drawn, can we represent only 15% of the debtors as collectable and the 85% be represented in the Notes forming part of balance sheet.

Is there any guidence note on this treatement.

Please help

Regards
Venkat

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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07 August 2008 Under securitisation the securities with the underlying assets representing the book debts must have been sold by the originator. But you are saying bank has advanced money. Is it factoring or securitisation you are referring to?

Venkatesan Iyengar

Venkatesan Iyengar (Querist)
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07 August 2008 yes this is a factoring arrangement with the bank. what could be the status

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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07 August 2008 If it is a factoring arrangement, You can take it off your balancesheet. But you have to say wheher it is with or without recourse to you. If it is with recourse, you have to eibit as a contingent liability in your notes. If it is without recourse, then totaly forget about it after factoring.

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