Greensill: lending before the invoice exists

A manufacturer has delivered an order. Its customer will pay in three months, but materials for the next order must be bought now. A finance provider advances most of the invoice value and waits for the customer’s payment instead. The service bridges the gap between making a sale and collecting the money. The receivable is that right to payment, which the finance provider acquires.

Now change one detail. The goods have not been sold. The expected customer has not bought anything. Money is nevertheless advanced against a sale that may happen later. Before there can be a payment to collect, the business still has to create the obligation on which the investment is supposed to rely.

Greensill funded advances to businesses by distributing securities to investors. The investments involved included four Credit Suisse funds for qualified investors: investment vehicles, not deposit accounts. The FCA describes the structure in its May 2021 letter.

The funds, described as low-risk in client documentation, were closed in March 2021. The move from waiting for payment to waiting for a sale sits at the centre of the Greensill case. The Swiss regulator FINMA found that some claims transferred to Credit Suisse funds had not yet come into existence. “Some” matters. The finding does not turn the entire portfolio into fabricated invoices. Source: FINMA’s February 2023 conclusions.

The case is back in the news following Insurance Australia Group’s settlement announcement on 25 September 2026. Credit Suisse entities had brought claims with a face value of about A$2.8 billion, plus interest. The settlement terms are confidential. That figure describes the claims, not the payment agreed.

Behind the litigation lies a problem worth understanding beyond this particular failure. A product can become dependent on the very protection that makes it look reassuring. Insurance must be examined as a payment contract, with a defined scope and conditions. It cannot settle the prior question: who already owes the money?

A useful advance, provided the asset is understood

Consider a fictional invoice worth €100, due in 90 days. A finance provider pays the manufacturer €98 now and receives €100 when the invoice falls due. The €2 difference is gross income, before funding costs, checks, any protection purchased and credit losses. It is neither net profit nor an annual rate of return.

The manufacturer gets cash sooner. The buyer keeps its agreed payment terms. The finance provider mainly assesses whether that buyer can meet an existing obligation. This is the basic supplier-finance mechanism described in the Bank of England’s letter of 6 May 2021.

An ordinary invoice is hardly risk-free. The delivery might be defective, the amount disputed or the buyer insolvent. Documents, assignments and collections still need checking. Yet one important commercial question has already been answered: somebody has purchased something.

An advance against expected business adds another question. Will the manufacturer actually make the sale? Can it produce and deliver the goods? Naming a large company as a possible future customer does not make that company a debtor. Its financial strength is of little help if it has no obligation to pay.

There is nothing inherently improper about financing future business. The lender can assess the manufacturer, take security over its assets and charge for the risk. But the exposure is now to a company and its prospects, rather than simply to the payment period on an existing sale.

Lex Greensill defended such lending before British MPs. He maintained that, apart from its UK government future-receivables programme, his future-receivables facilities were secured against real assets. That was his account at the hearing on 11 May 2021. The absence of an existing invoice does not therefore establish that the financed company owed nothing, or that lenders had no other recourse or collateral.

A claim on a factory is not equivalent to waiting for a buyer’s bank transfer. A factory may be valuable but take months to sell. If expected orders fail to arrive, both the value of the business and its ability to repay can deteriorate together.

Insurance depends on the underlying obligation

Credit insurance is intended to cover a payment default under the terms of a policy. Understanding its value starts with the obligation insured, the beneficiary and the event that triggers payment. “Insured” is not, by itself, a description of a fund investor’s right to get cash back.

One document shows how far the substitution between these questions could go. When seeking access to Britain’s emergency corporate funding scheme in 2020, Greensill proposed using insurers’ credit ratings in place of the ratings of underlying borrowers. The Bank of England did not regard debt from weaker companies, even with insurance, as equivalent to investment-grade corporate debt. Its letter to MPs, page 5, records the distinction.

Suppose a company owes you €100 and a third party promises to compensate you if it fails to pay, subject to specified conditions. You may have acquired a second source of repayment. The original company has not become that third party, and the steps required to enforce the promise have not disappeared.

To assess the protection, the financed asset must be matched to the risk described in the policy. Is that kind of claim eligible? Were the relevant facts disclosed accurately? Is enough cover available? Who can demand payment? These are due-diligence questions, not a claim that every Greensill policy contained identical provisions.

The difficulty is greater when both insurer and investor depend on information from the same intermediary without sufficient independent checks. A mistake about the asset can then affect the credit assessment and the assessment of coverage at the same time. Adding corporate names to a transaction does not necessarily add independent evidence.

Cover for one asset, permission to finance the next

Renewal creates a separate dependency. Lex Greensill acknowledged excessive reliance on one insurer despite having relationships with several. He explained that some investors required insurance before they would buy assets. Source: the hearing, questions 92 and 161.

In that arrangement, insurance performs two jobs. It offers protection for eligible exposures. Its availability also makes new financing possible. A withdrawal of capacity can stop advances even while buyers continue to pay older invoices normally.

The Treasury Committee’s report identifies 1 March 2021 as a crucial date. Greensill Capital UK lost the benefit of approximately US$4.6 billion of insurance intended to cover newly originated assets. It stopped originating new assets the following day. After an accelerated payment demand on a loan it had guaranteed, administrators were appointed on 8 March.

That does not mean every earlier insurance contract was cancelled on 1 March. The inability to insure new assets and the validity of cover for existing ones are different problems. Both can become serious, but through different routes.

Imagine a supplier that pays for its next shipment using the advance against its previous deliveries. If that advance disappears, a customer’s payment due later may not cover Friday’s payroll. The finance provider’s difficulty can reach the supplier before the customer itself defaults. This is an illustrative mechanism, not a reconstruction of a particular Greensill client’s cash position.

The same logic applies to diversification. Ten unrelated companies might all be financed under arrangements that depend on a single renewal decision. Having ten debtors does not diversify that decision. What looks like ten separate exposures still contains one shared condition.

The withdrawal came with a history

Greensill pointed, among other things, to the pandemic’s effect on insurance capacity. BCC offered a different explanation. In its letter of 18 June 2021, it said non-renewal had been communicated months earlier and described concerns specific to Greensill that had developed from July 2020. It denied that general market conditions had been a significant factor in its decision.

The Treasury Committee did not treat the case as strong evidence that insurance regulation had amplified the downturn. Its conclusion calls for examining Greensill-specific circumstances before attributing the withdrawal of cover to the wider economy alone.

A funding interruption and the reasons behind it should not be confused. The interruption may be the immediate trigger. The reasons may involve much earlier information about assets, concentrations or the circumstances in which policies were written. Identifying the last event does not explain the vulnerability that made it decisive.

Nor must the analysis choose between an unjustified panic and a withdrawal with no wider consequences. A lender may discover a genuine problem and pull back. That decision can then make the borrower’s position worse. Both propositions can be true. Establishing what each party knew, and when, matters more than forcing the story into one of those alternatives.

When payment is due, the arguments begin

On 4 April 2022, Tokio Marine said multiple policies had been obtained through fraudulent misrepresentations or material non-disclosures, and stated that it regarded them as void from inception. Credit Suisse maintained that the policies were valid, according to its response reported by Reuters that day.

Those were opposing litigation positions. Reporting them does not establish fraud in every transaction or validate every policy. The confidential September 2026 settlement is not a public judgment resolving those issues contract by contract.

The risk mechanism is nevertheless clear. Just when an investment needs cash, it may have to establish what was insured, who provided the cover, who benefits and what disclosures supported the contract. Even a claim ultimately upheld can take time. The expected recovery and the payment date are separate uncertainties.

For an investor, that distinction is practical. An equipment purchase, a financial commitment or a portfolio adjustment may not wait for a court process. A reasonable prospect of eventual repayment does not meet an obligation falling due now.

The withdrawal timetable puts the fund under pressure

Take a fictional fund holding €20 in cash and €80 in claims payable later. Assume, deliberately, that all the claims will be paid in full. Investors ask to withdraw €35 today.

The immediate shortfall is €15. That is not necessarily a €15 loss in eventual asset value. The fund might seek a loan, sell claims or use the deferral provisions in its rules. Each option requires a contract, a buyer or a lender. None follows automatically from adding 20 to 80.

If an urgent sale requires a discount, a timing problem can become a loss. If available cash is simply paid to the first investors leaving, those remaining hold a portfolio with a greater share of hard-to-sell assets. This is the kind of vulnerability examined in the Financial Stability Board’s recommendations on open-ended funds. The example does not reproduce the assets or redemption rules of the four Credit Suisse funds.

Short maturities need similar scrutiny. A security may come due soon while the underlying business still depends on fresh advances. Its repayment might come from a commercial payment that stands on its own, or from financing that has to be renewed. A near-term maturity date does not tell an investor which.

Collateral has a timetable too. A building may reduce the ultimate loss without helping much with an immediate payment. A valuation that ignores the time needed to realise the asset leaves out part of the risk.

Someone still had to check the partner’s work

FINMA found that Credit Suisse had limited knowledge and control over the claims Greensill selected, while Greensill also arranged insurance in its own name. The bank had also overruled a risk manager’s objection to a bridging loan for Greensill. The regulator concluded that serious supervisory failures had occurred. Source: FINMA’s February 2023 findings.

This goes beyond a missing document. When a partner supplies assets and arranges part of their protection, the fund manager needs the ability to verify the product without relying entirely on that partner. Otherwise reassuring answers can travel through the same channel as the transactions they are supposed to test.

To an investor, a familiar institution’s name does not reveal who checked the invoice or confirmed the obligation with the buyer. A process may involve several firms but still have only one source of information. Independence has operational content: access to evidence, external confirmation, checks on collections and the ability to reject a transaction.

None of this requires the claim that every employee understood every defect in a portfolio. The documented issue is the organisation of control and the decisions actually made. Assigning a single collective intention would go beyond that evidence.

UBS offered investors a way out of the wait

Lengthy proceedings do not mean investors received nothing between the collapse and the September settlement. On 17 June 2024, UBS announced a voluntary exit offer at 90% of the funds’ net asset value on 25 February 2021, less distributions already made since then. Net asset value measures the assets, after liabilities, attributable to the fund units. It was not an additional 90% payment.

Use a fictional reference value of 100, with 70 already distributed. The additional payment would be 20, bringing the total to 90. The remaining 10 is the difference from that reference value, not a universal measure of each investor’s loss. Their purchase price, the timing of distributions and the value of time are outside this calculation.

UBS said it would fund the offer by purchasing units in new feeder subfunds. Economically, investors accepting the offer were being given an exit before the recovery process ended. Residual uncertainty was taken into that new holding rather than left entirely with them. The announcement does not establish that every investor accepted. Source: UBS’s announced terms.

A substantial eventual recovery is compatible with a failure to deliver the liquidity an investor expected. Receiving money years later does not make it available retrospectively. Equally, describing the entire investment as lost would be misleading where distributions and an exit offer exist.

The scope of the September 2026 settlement

IAG says the agreement concerns part of the litigation over policies purportedly written by BCC on behalf of Insurance Australia Limited. It expects no material effect on its financial position or results for the 2027 financial year, taking account of anticipated recoveries from insurance, reinsurance and indemnities. That estimate incorporates anticipated recoveries. The gross cost remains confidential. Source: IAG’s announcement.

Reuters’ report on 25 September confirms the confidentiality of the terms and distinguishes other proceedings. Fund claims, insurance claims and arrangements between insurers cannot simply be added together as separate losses. The same underlying damage can appear at several stages of the recovery chain.

The final location of the risk therefore remains partly hidden. A settlement may reduce one party’s uncertainty while its own cover shifts costs to another. Establishing the final bill would require actual payments, expenses, inter-party agreements and retained rights. Not all of that information is public.

Start with the sale, then look at the calendar

Supplier finance retains its purpose after Greensill. A business that has delivered goods can benefit from turning a commercial claim into cash sooner. In May 2021, the Bank of England also said Greensill’s failure had not threatened the stability of the UK financial system. That historical assessment is not a verdict on every structure operating today. Source: the Bank’s letter, page 1.

Accounting transparency has since improved. Amendments issued by the IASB in May 2023, effective for annual periods beginning on or after 1 January 2024, require additional information about supplier-finance arrangements, including amounts and payment dates. They can make dependencies more visible. They do not certify individual receivables or the validity of their insurance.

The central distinction remains close to the invoice. A completed sale, a forecast order and security over a factory can all support lending. They do not provide the same debtor, the same certainty or the same timetable. The price and exit terms must reflect those differences.

A revealing test is to remove the insurance from the analysis for a moment. Who owes the money? Under what commitment? Where will repayment come from if no further advance is available? Protection can then be added and assessed for what it improves. Starting with it risks leaving the asset itself unexamined.

In Greensill’s case, the distance between collecting an invoice and making a future sale was not a matter of terminology. It determined what still had to happen before money could come back. Insurance could not remove the need to understand that distance.

Further reading

The right to collect payment is also central to Radiant World’s disputed invoices. For more on withdrawal timing, see bond funds’ liquidity buffers and redemption limits in semi-liquid private credit. The glossary explains factoring and supplier finance.

Sources and documents

• Insurance Australia Group : Greensill Litigation Update, 2026-09-25 (company statement reproduced by Publicnow / MarketScreener).
• FINMA : FINMA concludes “Greensill” proceedings against Credit Suisse, 2023-02-28.
• Bank of England / Treasury Committee : Letter from Andrew Bailey to Mel Stride, 2021-05-06.
• House of Commons, Treasury Committee : Lessons from Greensill Capital, 2021-07-20.
• House of Commons, Treasury Committee : Oral evidence: Lessons from Greensill Capital, Lex Greensill, 2021-05-11.
• BCC Trade Credit / Treasury Committee : Letter from BCC Trade Credit to Mel Stride, 2021-06-18.
• Tokio Marine Holdings : Update on our subsidiary (BCC) and exposure of Tokio Marine to Greensill, 2022-04-04.
• Reuters, republished by Insurance Journal : Japanese Insurer Tokio Marine Says Greensill Obtained Policies Fraudulently, 2022-04-04.
• UBS : UBS announces voluntary redemption offer by Credit Suisse Supply Chain Funds to its investors, 2024-06-17.
• IFRS Foundation / IASB : IASB increases transparency of companies’ supplier finance, 2023-05-25.
• Financial Stability Board : Revised Policy Recommendations to Address Structural Vulnerabilities from Liquidity Mismatch in Open-Ended Funds, 2023-12-20.
• Reuters, republished by AOL : Insurance Australia Group settles $2 billion Credit Suisse lawsuit over Greensill collapse, 2026-09-25.
• Financial Conduct Authority / Treasury Committee : Letter from Nikhil Rathi to Mel Stride: Greensill Capital, 2021-05-04.

Method and limitations

Documents consulted on 28 September 2026. FINMA’s findings, litigants’ positions and economic interpretations are distinguished throughout. The 100-euro, cash-shortfall and 90% exit examples are fictional teaching calculations; they do not reconstruct any portfolio or client account. The confidential September 2026 terms prevent a public calculation of the final cost. The cover is an AI-generated editorial illustration.