According to recently published market reports, there has been 38% growth in the Businesses which use Invoice financing during Q2 2017 in the United Kingdom. However, a lot of countries still don’t prefer the use of it because of the high-risk nature. The risk is because there’s no transparency in the system. That’s why systems like Invox Finance come into the scene.
What is Invoice Financing?
Businesses need cash flow for daily activities and not all the Businesses get their payments on the day of invoice generation. That’s why many Businesses sell their due invoices to the Financiers or investors for lesser value. These investors/ financiers collect the unpaid amount from the customers of the Business after the credit period expires. The process involves, Businesses (Sellers), Financiers/Investors (The ones who buy the invoices from the businesses), and Business customers (Buyers.)
What is Invox Finance?
Invox Finance is a decentralized system built on the blockchain technology. Being a decentralized system, it establishes a direct connection between the parties involved. Thereby making the process transparent. Since the system makes all the information and the process transparent, everyone stays updated with the latest status of the transaction. Let’s check the features of the system to know more about it.
This feature of the system solves one of the major problems of the traditional invoice financing system. Everyone involved in the operation or process can directly interact, connect, distribute, and share information. Being decentralized not only makes the system transparent but also makes the process much faster.
In the traditional invoice financing, the invoices don’t change and aren’t available to all the parties once given to the financier. This way the financier could tell the Business that the buyer didn’t pay and could take extra money from the Business. However, with Dynamic invoicing built using Ethereum smart contract, everyone has access to the invoice in real-time.
Less Interest rate
The Invox system doesn’t just make the invoice financing transparent, but it also brings in individual investors. These investors could be anyone and not only big financial institutions or banks. That way the rate of interest for the businesses (sellers) might decrease.
Diversification of Funds
An investor can decide how much to invest in a particular business. For instance, there is one invoice worth $1000. The investor can choose and buy a fragment worth any amount of that invoice, say $10. This way, he could diversify his portfolio and could invest his money in different businesses and not just a single one.
Since the Invox finance allows the investors to diversify their funds, it reduces the risk of losses. An investor can invest his funds in 10 different businesses and not just a single one. The platform allows the investor to diversify his funds by enabling him to buy a fragment/part of an invoice.
For instance, instead of investing $100,000 in a single invoice, he can invest some part of his fund in it and spend the remaining into different opportunities. So if the buyer declares himself insolvent or is a fraud, the investor won’t be facing a significant loss.
The company also plans to launch its token called Invox Token. The token would be used to reward the buyers and sellers for facilitating (verification) of a transaction. The sellers would need to pay a certain amount of the tokens to pay the yearly subscription to access the platform.
Find out more about the project and the team working behind the scenes by visiting invoxfinance.io.
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