As not everyone may be familiar with the term “pledging” let us first briefly explain what pledging is. When a bank provides credit or a loan, they may ask for security in case the loan is not paid back. The security could be various assets such as real estate, cargoes, vessels but also the receivables of invoices – this is pledging. The answer to the question, if we as BMS United Bunkers pledge our invoices, is clearly no!
But others reading your question may still not be sure WHY this is a relevant question to ask. Quite simply put:
- COMPANY A sells goods to CUSTOMER B and the invoice is pledged to the BANK
- COMPANY A is not able to pay their loans to the BANK and go bankrupt.
- BANK will ask CUSTOMER B to pay the invoice value to them, as part of the terms and agreement with COMPANY A.
- COMPANY A and the BANKRUPTCY ESTATE will also ask CUSTOMER B to pay the invoice value to them as they are acting for all the creditors.
There have been some cases in recent years, where companies were forced to pay their invoice more than once, as they were totally unaware whether their counterparties where pledging and what this could lead to. We therefore urge everyone to know who they are dealing with and simply ask their counterparties IF they pledge their invoices, to know any potential risk.