Receivable Financing

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Feeding Generations

Bluefire Agrofin’s Receivable Financing Solution is a financial product designed to assist businesses in managing their accounts receivable and unlocking the value of their outstanding invoices. It provides a flexible and affordable way for businesses to access cash flow while waiting for customers to make payments.
Here’s how Bluefire Agrofin’s Receivable Financing Solution works:

Trade-receivable Finance

Bluefire Agrofin’s Trade-receivable Finance Facility is a financial solution designed to assist farmers and agribusinesses in managing their accounts receivable and unlocking the value of their outstanding invoices. It
provides a flexible and affordable way for businesses to access cash flow while waiting for customers to make payments.
Under this facility, businesses can sell their outstanding invoices to Bluefire Agrofin at a discounted rate, typically 80-90% of the invoice value. This provides immediate access to cash, which can be used to cover expenses, invest in growth, or meet short-term obligations.
Bluefire Agrofin assumes the risk of customer default, reducing the financial exposure for businesses. The application and approval process for the Trade-receivable Finance Facility is streamlined, allowing businesses to
access financing quickly and efficiently.

Benefits of Bluefire Agrofin’s Trade-receivable Finance Facility include:
● Immediate Cash Flow: Businesses receive an immediate cash injection, which can be used to cover expenses, invest in growth, or meet short-term obligations.
● Improved Liquidity: By unlocking the value of outstanding invoices, businesses can improve their cash flow and avoid cash flow gaps.
● Reduced Credit Risk: Bluefire Agrofin assumes the risk of customer default, reducing the financial exposure for businesses.
● Flexible and Scalable: Bluefire Agrofin’s Trade-receivable Finance Facility can be tailored to meet the specific needs and growth of businesses.
● Simplified Process: The application and approval process is streamlined, allowing businesses to access financing quickly and efficiently.
Bluefire Agrofin’s Trade-receivable Finance Facility is particularly beneficial for businesses that have a significant volume of outstanding invoices and need to improve their cash flow. It provides a reliable and cost-effective way to manage receivables and maintain financial stability.

Factoring

Bluefire Agrofin provides businesses with an invoice factoring solution. Through this service, businesses can leverage their outstanding invoices by selling them to Bluefire Agrofin at a discounted rate. This allows businesses to
access up to 90% of the invoice value immediately, thereby improving cash flow. Upon receipt of payment from the customer, Bluefire Agrofin collects the full invoice amount and remits the remaining balance to the business,
deducting a nominal fee. This arrangement enables businesses to convert their accounts receivable into immediate liquidity, facilitating smoother financial operations.

Forfaiting

Bluefire Agrofin’s Forfaiting Facility is a financial solution designed to support exporters and importers engaged in international trade. It provides a non-recourse financing option, enabling exporters to sell their receivables at a
discounted rate to Bluefire Agrofin without recourse to the exporter in case of non-payment by the importer.

Here’s how Bluefire Agrofin’s Forfaiting Facility works:
1. Export Contract:
The exporter enters into a sales contract with an importer for the supply of goods or services.
2. Forfaiting Agreement:
The exporter and Bluefire Agrofin enter into a forfeiting agreement.
3. Transfer of Receivables:
The exporter assigns the receivables arising from the export contract to Bluefire Agrofin.
4. Financing:
Bluefire Agrofin pays the exporter a percentage of the invoice value, typically 80-90%, upon the transfer of receivables.
5. Collection:
Bluefire Agrofin assumes the risk of non-payment by the importer and collects the receivables from the importer at maturity.

Benefits of Bluefire Agrofin's Forfaiting Facility:

● Non-Recourse Financing: Bluefire Agrofin assumes the credit risk of the importer, eliminating recourse to the exporter.
● Immediate Cash Flow: Exporters receive an immediate cash injection upon the transfer of receivables, enhancing liquidity.
● Risk Mitigation: Exporters are protected from the risk of non-payment by the importer, securing their export transactions.
● Export Growth: By mitigating risks and providing access to financing, Bluefire Agrofin’s Forfaiting Facility supports exporters in expanding their international trade.
● Simplified Process: The forfeiting process is straightforward and efficient, allowing exporters to focus on their core business activities.

Physical-Asset Collateralization Credit Facility

Bluefire Agrofin offers a Physical Asset Collateralization Credit Facility, which allows borrowers to secure a loan by pledging valuable assets as collateral. If the borrower fails to repay the loan, Bluefire Agrofin (BAF) has the right to seize and sell the asset to compensate for the loss. This collateralization of assets provides BAF with a level of protection against default risk. In cases where a farmer seeking a loan is unable to demonstrate sufficient cash flow or cash assets to cover the loan, BAF may still approve the loan if the farmer offers physical assets as collateral. Mortgages and car loans are examples of collateralized loans. Additionally, personal assets such as savings or investment accounts can be used to secure a collateralized personal loan.

Warehouse Receipt Finance

Bluefire Agrofin provides warehouse receipt financing, offering loans to purchasers based on pledged warehouse receipts for supplier goods stored at a designated warehouse. Bluefire Agrofin manages the draw rights for the
goods, aiming to provide leverage for purchasers and facilitate bulk sales for suppliers.

Business Process:

1. Loan Application: The purchaser applies for a loan secured by a warehouse receipt to buy products from a specific supplier.
2. Supplier Assessment: Bluefire Agrofin evaluates the supplier’s creditworthiness and ability to repurchase goods.
3. Agreements: Bluefire Agrofin and the supplier enter into repurchase and quality assurance agreements.
4. Warehouse Supervision: Bluefire Agrofin and the warehouse supervisor establish a warehouse supervision agreement.
5. Product Shipment: Upon receiving notification of Bluefire Agrofin’s financing approval, the supplier ships goods to the designated warehouse and acquires the warehouse receipt.
6. Deposit Payment: The purchaser pays a 30% acceptance deposit.
7. Pledging and Disbursement: The supplier pledges the warehouse receipt to Bluefire Agrofin. In exchange, BAF issues a bank draft to the supplier, with the purchaser as the drawer and the supplier as the payee.
8. Draw Rights: The purchaser makes deposit payments, and Bluefire Agrofin grants draw rights to the purchaser until the deposit balance equals the bank draft amount.
9. Repurchase Obligation: If the bank draft matures and the deposit balance is insufficient, the supplier must repurchase the pledged goods under the warehouse receipt on the maturity date.

Advantages

● Realizes batch sales of suppliers and improves operating profit.
● Reduces financing from banks and capital cost.
● Ensures collection of receivables and elevates fund utilisation.
● Helps purchasers obtain financing and lowers purchasing costs.

Repurchase Agreements (Repos)

Bluefire Agrofin’s repurchase agreement (repo) is a forthcoming transaction facility that will be announced soon. It involves a borrower temporarily lending a security to Bluefire Agrofin in exchange for cash, with an agreement to buy it back in the future at a predetermined price. Notably, the ownership of the security remains unchanged in a repo transaction. Due to this characteristic, repos are classified as collateralized loans in the Monetary and Financial Statistics Manual (MFSM).

Financial Leasing (Lease-purchase)

At Bluefire Agrofin, we provide capital leasing solutions tailored to the needs of farmers and agribusinesses, allowing them to utilise capital equipment without the burden of outright purchase. Our diverse range of lease options
includes:

1. Straight Financial Lease: A traditional lease where the lender retains ownership of the asset, and the lessee gains the right to use it for a specified period.
2. Lease Back: This lease arrangement involves selling an asset to a leasing company and leasing it back, providing immediate capital while retaining usage rights.
3. Discounted Lease: A lease where the lessee makes periodic payments at a discounted rate, typically below the market rate.
4. Block Discount Lease: A lease designed for multiple assets acquired simultaneously, offering a discounted rate for the entire package.
5. Operating Lease: A short-term lease where the lessee does not assume ownership of the asset at the end of the lease period.
6. Master Finance Lease: A comprehensive lease that combines multiple assets under a single agreement, simplifying management and reducing costs.

Conditions For Leases

To qualify as a capital lease, a lease contract must satisfy any of the four criteria.
● The life of the lease must be 75% or greater for the asset’s useful life.
● The lease must contain a bargain purchase option for a price less than the market value of an asset.
● The lessee must gain ownership at the end of the lease period.
● The present value of lease payments must be greater than 90% of the asset’s market value.