October, 2014: Maurice Corver, founder and CEO of Cloud 9 Group which specializes in developing and maintaining receivables management systems sees quantum development opportunities for businesses both in receivables management and in financing.
Cloud 9 was established in 2013 by merger of a number of existing solutions and trade names for the order to cash process, resulting in a strong but flexible company and a platform capable of hosting the entire order to cash process for customers of any size globally.
We provide (E)-billing, automated Dunning, transaction hosting and processing, credit management and ABS tools. All of these tools are modular and can therefore be used separately or in any required combination with little or no implementation effort involved. Whereas order to cash management services are the foundation of our product offering, in early 2013 we developed and executed customized reporting systems for Clondalkin Group to deliver its reporting requirements in a €90m securitization with ING.
Asset securitization is a preferred lending mechanism for finance providers. Simply stated, banks prefer to lend against high quality assets. A strong receivables book with good collection performance is an ideal asset for banks to lend against and businesses to fund with. The credit rating on the receivables book stands quite separate from the rating of the company. Where a business has a consistently performing receivables book, in particular, consistent transaction activity and good collection experience, that asset will attract strong credit ratings. By reason of these ratings, the securitization products offered by the banks which ring fence the lending arrangements from other financing arrangements it is possible for businesses to exploit their balance sheet strengths to access financing on attractive terms and conditions.
Asset pools are sold and credit is enhanced by tranche and reserve mechanisms. Credit enhancement ensures the creation of high-quality asset pools. A strong receivables book with good collections performance is an ideal asset for banks to lend against and businesses to fund with. The credit quality on the receivables book can be isolated from the rating of the company. Where a business has a consistently performing receivables book, consistent transaction activity and good collection experience, the asset can be credit-enhanced with favorable reserve levels to come to the required credit rating. Securitization products offered by the banks create bankruptcy-remote structures that ring fence the lending arrangements from other financing arrangements. By selling these short-term assets, businesses can get access to financing on attractive terms and conditions.
It is the ultimate win-win for banks and businesses alike.
According to Maurice Corver, “the key access issue in bringing banks and businesses together to exploit this opportunity is efficient information systems. To service the receivables securitization process, as the receivables book literally changes every day, the banks require daily, weekly and monthly reporting routines. That is where Cloud 9 solutions come into the equation. Cloud 9 provides the linking software.”
The Clondalkin case study is a great example. Annual sales in excess of €750m, operating in several currencies and in eight jurisdictions throughout Europe and North America with over 30 legal entities.
Clondalkin appointed Cloud 9 to devise a data collection and management system to gather, process and manage all of this data. Our brief was to take the output of the various ERP systems and without changing any of the local arrangements, create a central data base to provide the bank with the weekly and monthly reports required, as well as a platform to manage the order to cash process on a day to day basis.
The brief was simple. The execution I am glad to say was also simple and today at a push of a button Clondalkin can generate any and all of the following information reports: daily sales, daily cash, arrears, transaction activity analyzed by any metric – all invoices issued or all invoices above a certain amount and likewise for credit notes and collections and invoices becoming overdue largest to smallest and by business.
In summary, the Cloud 9 product offers data management and information reporting routines which are otherwise not possible. New high quality and up to the minute information available on demand using our report generators offers more efficient receivables management possibilities.
Corver continues; “the Clondalkin – ING securitization project was a great one for Cloud 9. Our systems were tested under demanding conditions as part of executing new securitization financing arrangement under tight deadlines. Cloud 9 played a significant role in the execution team to deliver all the components from legal agreements to systems documentation to managing all the accompanying due diligence processes. The project was delivered on time. The legacy is information reporting systems which provide fantastically expanded insight and management capabilities.”
Michel Jansen, the CFO of Clondalkin endorses the Cloud 9 contribution as follows; “ we asked Cloud 9 to take our information from various sources and create one data source, to give us the ability to produce on demand reports each day and create a level of insight we have never had before. The Cloud 9 solution delivered a precise result on time. We are all excited about the power the system puts in our hands going forward. In terms of the securitization product, we delivered a triple AAA asset to our lenders to attract great terms and conditions. The project delivered its objectives and is delivering value to us every day.”