I think there's a great misconception about how Populous platform works. It is not offering invoice factoring or discounting, but rather a loan from the invoice "seller" to the the invoice "buyer", with the faint promise that the loan will be repaid once the invoice "seller" is paid by the ultimate customer. This makes no sense at all. In real factoring/discounting, the sale of the receivable transfers ownership of the receivable to the factor (i.e. the buyer of the invoice), and the factor obtains all of the rights associated with the receivables. Accordingly, the receivable becomes the factor's asset, and the factor obtains the right to receive the payments made by the customer for the invoice amount. In other words, the buyer of the invoice should be the one repaid directly by the ultimate customer, not the seller. Otherwise the seller is being paid twice for the same invoice (once by the invoice buyer and once by the customer); this goes against the very essence of what a factoring transaction is. It is also possible to structure a collateralized loan transaction that uses the invoices as collateral for the ultimate repayment of the loan, but that isn't what Populous is doing. In fact, the transaction that Populous is envisioning makes no sense at all.
The way you describe how Populous works is just wrong. It IS an actual sale of the invoice at a discounted price. I suggest you some more research on the process.
That said, it's a variation of invoice discounting and I'm not aware of any existing models that are similar, so you can't really make a direct comparison to traditional factoring or discounting. It'll compete in the same market, but it's not exactly the same type of business.
If it were indeed, as you say, a sale of the invoice at a discounted price, then why is the process described as follows on Populous's website (
https://populous.co/about-platform.html):
-Deposits must be exchanged to Pokens.
-Invoice buyer transfers Pokens to invoice seller.
-Invoice seller transfers Pokens to invoice buyer on repayment of invoice.
-Withdrawal of funds in government currencies, Bitcoin or Ethereum.It is pretty clear from the above that the invoice seller is the one who is ultimately repaid by the customer, which is the very antithesis of an invoice sale or factoring transaction. You can clearly see in the process above that the invoice seller gets paid twice, once by the invoice buyer (in Pokens) and once by the ultimate customer (in fiat). The reason real factoring transactions don't work like this is that they are structured in such a way as to avoid the moral hazard of seller non-compliance. In real factoring, when an invoice is sold, ownership of the invoice is transferred to the buyer, so that the buyer recovers directly from the customer. That is the very essence of factoring/invoice discounting.
This same process is explained in further detail on page 16-17 of the Feb 2017 Whitepaper
https://web.archive.org/web/20170606070843/http://populous.co/populous_whitepaper.pdf:
If the auction is successful:
1.6.9. The beneficiary of the auction receives the funds from the investor group, which has won the auction.
1.6.10. The investors from the other investor groups are refunded their bids.
1.6.11. When the borrower cashes the invoice, which he has auctioned, he sends the money to the platform.
1.6.12. When the funds are received, the investors from the investor group, which has won the auction, receive their winnings. Each investor receives dividends propor-tional to his bidding contributions.You can see clearly above that invoice "seller" is paid funds once by the investor group (paragraph 1.6.9.) and then a second time by the customer when the invoice is cashed out (paragraph 1.6.11.). From a functional perspective, this cannot be a "sale" of the invoice, because in such case the "seller" cannot be repaid directly by the customer, the right of repayment having been transferred to the buyer. Now, when you take away the right of direct repayment from the invoice "buyer", then this becomes nothing more than a simple loan, or an "IOU". There is no collateralization or other defensive mechanism protecting the invoice "buyer" from the seller's eventual non-compliance. In fact, there isn't even a way for the invoice "buyer" to know whether the invoice has been repaid/cashed out.
You should really be asking yourself whether it's a good idea to invest in a team that can't even properly explain how a factoring transaction works... perhaps this is because they have absolutely no experience in this field.
I'm not sure what to tell you. I interpret the process differently than you do and see it as a sale with the transfer of cash being addressed through accounting entries. Also, as I mentioned before, it's a variation of factoring/discounting, so it's not that they are describing it "wrong", it's just that their process is different.
I know it's not perfect and I still have some open questions myself, but relative to other crypto investments, I think this one is extremely strong.