Private credit and asset-based lending (ABL) are booming in the United States. Capital is flowing into receivables facilities, fintech warehouse lines, consumer loan portfolios, inventory-backed structures, and a growing set of "asset-based finance" strategies that promise downside protection through collateral.
But the last year has exposed a hard truth: collateral only reduces risk if you can verify it, monitor it, and track the cash it generates. When markets rely on trust, periodic sampling, and after-the-fact audits, problems can remain hidden until losses are irreversible.
Interestingly enough, the most verification-forward ABL market isn't the U.S. It's Latin America.
Latin America's private credit ABL ecosystem is often more advanced from a security perspective not because the market is larger (it isn't), but because it was built with a different baseline assumption: fraud risk is real, operational risk is constant, and verification must be embedded from day one. Oh, and because Vaas set the standard for cost-effective asset-level verification, which is now the expectation.
This post explains why the LatAm model tends to be more resilient, what the U.S. system gets wrong, and what needs to change next.
ABL and Private Credit in One Sentence
Asset-based lending is financing secured by specific assets: consumer loans, invoices/receivables, merchant cash advances, inventory, and other contractual cash flows.
Private credit is the market for non-bank lenders providing bespoke financing, often with faster execution and more flexible terms than traditional banks.
ABL has become a favorite in private credit because it sounds safer: "We have collateral." But that safety is only real if the lender can answer three questions continuously:
• Do the assets exist and are they valid?
• Are they owned, eligible, and not pledged elsewhere?
• Do the cash flows reconcile to the asset tape and facility structure?
If you can't answer those questions in near real time, collateral becomes a story. And stories don't repay debt.
Market Size: U.S. vs Latin America (and Why It Doesn't Predict Maturity)
The U.S. private credit market is enormous. It's measured in the trillions of dollars, with thousands of deals across sponsor-backed lending, specialty finance, receivables funding, and structured private facilities.
Latin America's private credit ABL market is smaller by comparison. Total volumes vary by country and cycle, but overall deal flow is a fraction of U.S. levels.
So why does LatAm often look more advanced in verification?
Because market maturity isn't only about size. It's also about what the market assumes and what it standardizes. And in Latin America, the assumption has long been:
If you don't verify at the asset level, someone eventually takes advantage of the gaps.
That assumption drives better infrastructure, stronger operating requirements, and more standardized facility structures.
Why LatAm ABL Is More Secure: Verification Is the Default
Asset-level verification is expected (thanks to Vaas)
In many Latin American facilities, verification is no longer sampling-based. It's close to full coverage.
If a portfolio has 200,000 consumer loans, the expectation is not "check 200." It's verify the portfolio. If a facility is backed by invoices, it's not enough to see a monthly summary report; lenders often want the asset-level detail, the actual invoices (we refer to them as "atoms") behind the collateral.
This doesn't eliminate risk. But it dramatically reduces the room for:
• Fabricated collateral
• Missing documentation
• Eligibility manipulation
• Silent portfolio drift
• Double pledging and overlapping collateral pools
When you verify everything, issues surface early. When you sample, issues surface when it's too late.
Why does LatAm expect asset-level verification?
Latin America didn't always operate this way.
Like the U.S., the region started with statistical sampling and periodic audits. But in a market where fraud risk is assumed to be real, the gaps between samples are where losses happen.
Vaas made full-tape verification practical.
We were built in this environment and designed to verify collateral at the asset level, at scale, at a cost profile that works. Once lenders and trustees realized 100% verification was operationally feasible, expectations shifted fast.
In other words, LatAm expects asset-level verification today because the infrastructure exists to deliver it.
LatAm benefits from stronger traceability infrastructure
Many Latin American countries also have structural advantages that make verification more tractable:
• A government-mandated, fully standardized e-invoicing system
• Registries and platforms that support receivables traceability
• Tax authority "ticketing" systems that leave digital fingerprints
• Centralized or semi-centralized mechanisms to track invoice status and ownership
In places like Peru, Brazil, Chile, and Colombia, e-invoicing and related systems create a level of traceability that makes certain fraud vectors harder to execute. It's not perfect, but it reduces ambiguity and enables more automated validation workflows.
Facility structures assume fraud risk from day one
LatAm ABL transactions also tend to be structured with standardized controls that are designed to survive bad outcomes.
Common components include:
• Master servicer for day-to-day servicing and reporting
• Backup servicer appointed up front, ready to step in
• Trustee overseeing controls, accounts, and enforcement
• Verification agent providing independent collateral validation
• Calculation agent calculating borrowing bases
• Frequent reporting cadence, often daily or near-daily on key metrics
This "belt and suspenders" structure exists because the market assumes things can go wrong, and designs the facility so it continues functioning even if a servicer fails, an originator defaults, or data integrity deteriorates.
"Track the cash" is operational doctrine
LatAm markets are typically more aggressive about cash reconciliation. Tracking cash flows is treated as core risk infrastructure, not a back-office task.
Collections are compared to expectations. Exceptions are investigated quickly. Performance trends are monitored continuously. And the facility design often makes diversion harder.
The result is a market where trust is earned through systems, not relationships.
The U.S. Model: Fragmented, Unstandardized, and Historically Sampling-Driven
The U.S. has sophisticated lenders and long-established secured lending law. But the operational model is fragmented.
UCC filings are not a real-time collateral registry
UCC-1 filings are essential for lien perfection, but they're not designed for modern asset-based finance. They're broad, state-based, and not asset-specific. They don't provide continuous visibility into what assets are pledged, whether they're pledged twice, or whether collateral tapes overlap across facilities.
A UCC filing is a legal notice. It's not a verification system.
Verification varies by deal, and power dynamics matter
In the U.S., requirements vary dramatically by lender and borrower. In some cases, large borrowers have enough leverage to dictate lighter-touch monitoring. In mid-market deals, lenders may require tighter terms. There is no uniform market standard.
The result is often:
• Monthly reporting cadence
• Sample-based verification
• Delayed tape delivery
• Manual exception handling
• Limited cross-facility visibility
Sampling works until it doesn't
Sampling-based verification can be rational when fraud is unlikely and systems are stable. But it breaks down quickly when fraud is intentional or operational complexity increases.
Sampling doesn't reliably detect:
• Systematic misrepresentation designed to evade spot checks
• Duplicates across the full tape
• Drifting eligibility and exceptions
• Cash diversion between reporting periods
Most importantly, sampling assumes integrity. It doesn't enforce it.
The Consequence: Fraud, Losses, and a Market Wake-Up
The U.S. market is now seeing what happens when a trust-first system meets real fraud and operational fragility.
We've seen high-profile incidents involving alleged double pledging, fabricated collateral, missing documents, and failures to reconcile collateral reporting to real cash flows. We've also seen countless non-headline operational errors that create unforced losses: mismatched tapes, broken processes, stale reporting, and manual workflows that do not scale safely.
The cost isn't only realized losses. It's the shift in market psychology:
When lenders lose confidence in collateral integrity, they lose confidence in the strategy.
That leads to wider spreads, lower advance rates, slower deployment, more diligence friction, and harder workouts.
At trillion-dollar scale, that is not sustainable.
What the U.S. Can Learn From LatAm
The U.S. doesn't need to copy Latin America wholesale. But it should adopt the core lesson:
Verification is infrastructure, not a feature.
That means:
• Moving from periodic verification to continuous verification
• Treating cash flows as the source of truth
• Building operational standards for trustee-ready reporting
• Implementing cross-facility uniqueness checks and integrity controls
• Reducing reliance on manual workflows and monthly snapshots
The market's next phase will reward lenders and borrowers who can prove transparency at scale.
Where Vaas Fits: Built for the Toughest Verification Markets
Vaas was built in the environments where the default assumption is that fraud risk is real and verification must be continuous. We're building the infrastructure in LatAm, where we've already set the standard; now, we're bringing it to the rest of the world.
We built Vaas to protect private credit portfolios against:
• Fraud risk
• Operational errors
• Missing or invalid documentation
• Double pledging across facilities
• Data integrity breakdowns
• Cash flow inconsistencies
Our platform can:
• Verify every asset and supporting document at scale
• Validate ownership and uniqueness using available registries and facility data
• Plug into payment gateways and bank accounts to reconcile cash flows
• Generate trustee-ready verification outputs
• Enable servicing and verification operations, or serve as verification agent
• Handle portfolios with millions of loans without absurd cost
If you're a lender, trustee, or servicer looking to foster trust and transparency in your debt facilities, we'd love to help.
Learn more at www.getvaas.com.
