Anticipating receivables helps guarantee sales for Safrinha 2021

Distributors can raise funds to buy inputs to sell more in the off-season with anticipation of receivables

12.11.2020 | 20:59 (UTC -3)
Fernanda Aleixo

Brazil has an extremely favorable scenario for the 2021 harvest. The increase in national and international demand stimulates the sector, which is expected to reach record production.

With the increase in international demand, mainly due to China's interest in this commodity, at the end of the first half of this year, 40% of the 2021 off-season corn production in Mato Grosso was already commercialized, according to IMEA (Instituto Mato-grossense de Economia Agropecuária ). According to experts, around 35% of all future production of this crop in the national territory has already been sold.

The projection recently made by Conab (National Supply Company) points out that the 2021 production of the corn harvest should reach 76,7 million tons, 2,3% higher than in 2020. And given the positive scenario, the Distributors are already receiving a very large demand for sales.

Meeting the high demand for inputs

A large part of input purchases in Brazilian agribusiness is carried out through the barter operation, a commercial enabler where the producer pays for the purchase of inputs to the distributor with part of their future production. The operation is being increasingly sought after and input distributors, in a way, are “trapped” in this type of transaction or do this, or have the chance of losing sales to competitors.

Therefore, how can distributors raise funds to be able to purchase inputs to sell even more in this off-season?

One of the most efficient ways is the anticipation of receivables. The service works as follows: CPRs and titles received by distributors are analyzed using technologies, such as artificial intelligence analysis and data crossing. After ensuring the risk involved in the operation, these receivables are negotiated with the capital market, where an investment fund “buys” the security and pays directly to the distributor.

Advantages of anticipation for distributors

The security and financial health that anticipating receivables brings to distributors is undeniable. However, this operation can also be used proactively to ensure more sales.

To serve producers who need a large amount of inputs, the distributor needs to have cash available to make this purchase in the industry. If not, the distributor either loses the opportunity, or has to seek resources at unattractive rates from sources such as banks and financial institutions.

With the anticipation of receivables, the distributor has a new financing alternative. With TerraMagna, for example, he can bring together the CPRs or duplicates of his producers to generate resources to make this sale viable through anticipation. Where receivables are analyzed with the help of satellite monitoring and are subsequently “connected” to the capital market that “buys” the CPR and pays cash to the distributor.

“By making this purchase in cash, the distributor obtains discounts from its suppliers that, in many cases, are equivalent to the advance cost rates. In other words, anticipation works as an effective method of making larger sales that might otherwise be unfeasible”, says Bernardo Fabiani, credit granting specialist and CEO of TerraMagna.

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