The failure of Greensill has many different aspects and dimensions to it. At the core there seems to be the overexpansion of a financing company providing what has been traditionally
known as (reverse) factoring, i.e., the discounting of invoices: Firm A sends invoice to Firm B with payment target of 30 days, and receives (discounted) funding from the factoring company immediately, with the factoring company collecting money from Firm
B after 30 days. The additional twist in the case of Greensill seems to have been that it attracted funding from investment funds linked to Credit Suisse (but with credit insurance as condition), benefiting from investors being desperate for any yield in the
time of low interest rates. Together with the rapid (over-) expansion there was a concentration risk and some rather non- or less transparent (to stay with diplomatic language) deals with Sanjeev Gupta. The trigger for Greensill’s failure was that its
main insurer – Tokio Marine- refused to renew an important credit insurance contract and that, as consequence, Credit Suisse froze its funding to the firm.