Factoring exchange- Robin Trehan

Sept. 28, 2009 - PRLog -- 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

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