Factoring exchange- Robin Trehan

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Bill Gates of Microsoft fame once said, “Information technology
and business are becoming inextricably interwoven. I don't think anybody can
talk meaningfully about one without talking about the other.”

The Internet has allowed companies to grow, change and interact
in ways that could never have been predicted prior to its inception. Technology
turns good ideas in productive realities.

One way in which the “worldwide web” has facilitated progress is
the creation of new ways to do business. Among these is the idea of a “receivables
exchange” where businesses are able to auction off their accounts receivable in
real time to interested investors from around the world. Thanks to online
technology, the entire transaction can be completed within a matter of just a
few days. This allows businesses to access ready cash and begin using it much
more quickly than they would be able to if it were tied up in the limbo of
accounts receivable. The benefits are clear when one considers that some
accounts owing aren’t paid for up to 180 days.

A receivables exchange works by creating a virtual online
marketplace. Buyers and sellers are both required to become approved members.
Once they’ve gone through the application process, they are ready to do
business.

The seller sets a minimum price and indicates the highest fee
they are willing to pay. They also choose other parameters, such as how long
the auction will last.

Because each sale is based on a competitive auction, sellers can
be sure they’re making the best deal possible. Buyers are able to quickly and
efficiently browse through available sales. They can easily access all the
information they need to decide if a particular offering is right for them.

Without the Internet, an exchange like this, and all the
benefits it offers both buyers and sellers, would simply not be possible.
Real-time communication, aggregation of data, negation of geographic boundaries
and the ability to search on a variety of terms are all required for the model
to work effectively. Receivables exchanges are a great example of how
technology has helped modern business “build a better mousetrap”.

Robin Trehan is assocated with the equity fund of Credit Capital
Funding and its groups of companies. More information www.creditcapitalfunding.com  www.businesscreditfunding.com