Securitizations

Companies often transform liquid assets into securities that can be sold or transferred to fund working capital and liquidity needs. Examples include asset factoring arrangements and transfers of assets (often trade accounts receivables) to bank-sponsored commercial paper conduits. There are sometimes referred to as securitizations.

Accounting guidance governing such transactions has significantly altered the way trade receivable transfers are analyzed. Many structures used to effect such transfers likely will be accounted for as secured borrowings.