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We are EOS FinCrowds, based in Montreal Canada and we are candidates in the EOS Hong Kong Hackathon, on June 9-10
Please LIKE our video and give us a chance to qualify for this Hackathon:
https://www.youtube.com/watch?v=IVIGjQkl0NQ&feature=youtu.be
Intro: we want to make crowdfunding more accountable and transparent by using EOS smart contracts. we want to create a blockchain based solution for project financing which will govern the gathering, custody and distribution of funds related to a common enterprise.
Think of GoFundMe, with added transparency and accountability mechanisms built in.
Problem:
Currently, once a crowdfunding is complete, initial backers of the project lose control and oversight over the funds raised. And there are no reliable ways to manage the risk of resource misallocation, exit scams and failure to share profits or honor equity.
This is a big problem, It is estimated that enterprise financing fraud amounts to over $57 billion dollars annually, this includes both crypto-related frauds as well as those in traditional finance.
Solution:
Our solution will address these problems by ring-fencing the funds with the implementation of a smart contract that will define the timing, manner and amounts of future disbursements while also providing a mechanism for redistributing excess profits or honoring equity.
On top of that, our solution will provide transparency and auditability of the account holding the funds. Which would encourage more people to participate in crowdfunding!
In this way, the community remains the effective custodian of the funds, while the project provider will be held accountable for the use of funds as well as for the equitable distribution of income.
This dApp has thousands of applications! From a GoFundMe-type-project to crowdfunding equity, and from ICOs to charity projects or even disaster relief funds.
Why blockchain / EOS
We are building this solution in EOS blockchain because:
Of its proven potential to handle a high transaction throughput to provide a high-performing application that is seamless to the end-user
And ability to correct coding mistakes and restore accounts
And more importantly because of the friendly community
Why Us
We have a strong and balanced team of software developers, entrepreneurs and researchers. We will build our dApp upon the latest go library created by EOS Canada.
Conclusion
Help us making crowdfunding more accountable by liking this video and sharing it with your friends!
We look forward to seeing you all this coming June, in Hong Kong!
Please LIKE our video and give us a chance to qualify for this Hackathon:
https://www.youtube.com/watch?v=IVIGjQkl0NQ&feature=youtu.be
Intro: we want to make crowdfunding more accountable and transparent by using EOS smart contracts. we want to create a blockchain based solution for project financing which will govern the gathering, custody and distribution of funds related to a common enterprise.
Think of GoFundMe, with added transparency and accountability mechanisms built in.
Problem:
Currently, once a crowdfunding is complete, initial backers of the project lose control and oversight over the funds raised. And there are no reliable ways to manage the risk of resource misallocation, exit scams and failure to share profits or honor equity.
This is a big problem, It is estimated that enterprise financing fraud amounts to over $57 billion dollars annually, this includes both crypto-related frauds as well as those in traditional finance.
Solution:
Our solution will address these problems by ring-fencing the funds with the implementation of a smart contract that will define the timing, manner and amounts of future disbursements while also providing a mechanism for redistributing excess profits or honoring equity.
On top of that, our solution will provide transparency and auditability of the account holding the funds. Which would encourage more people to participate in crowdfunding!
In this way, the community remains the effective custodian of the funds, while the project provider will be held accountable for the use of funds as well as for the equitable distribution of income.
This dApp has thousands of applications! From a GoFundMe-type-project to crowdfunding equity, and from ICOs to charity projects or even disaster relief funds.
Why blockchain / EOS
We are building this solution in EOS blockchain because:
Of its proven potential to handle a high transaction throughput to provide a high-performing application that is seamless to the end-user
And ability to correct coding mistakes and restore accounts
And more importantly because of the friendly community
Why Us
We have a strong and balanced team of software developers, entrepreneurs and researchers. We will build our dApp upon the latest go library created by EOS Canada.
Conclusion
Help us making crowdfunding more accountable by liking this video and sharing it with your friends!
We look forward to seeing you all this coming June, in Hong Kong!
I'm pretty sure this will happen. Bitcoin failed as a payment system, people just need to realize it. But give it some time and it will go < $1800. A year seems about right but it might be earlier.
Seriously you believe that??
I don't think that will ever happen. Bitcoin is on its peak now and has been greatly earned the trust of crypto investors and traders. There might just some internal issues for it to have swaying price but I strongly believe that it will go back with higher price.
Bitcoin will be below 1,800$ by the end of this month. Please take a look at the charts and stop kidding yourselves:
https://imgur.com/a/Czeb5
https://imgur.com/EBU4Dy9
The bubble has burst, and the fundamentals for Bitcoin and all crypto assets were way, way, WAY overblown. There is only one direction from here: Down!
Do yourselves a service and sell all your crypto assets now while they're still worth anything.
Re: [ANN] POPULOUS - Invoice trading platform | ICO l BOUNTY CAMPAIGN
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.
- Borrowers or invoice sellers sell their invoices at a discount depending on the risk credit rating calculated. So an invoice may be worth $1000 and the borrower may sell it for 10% less of it's value which is $900. This will rewarded the invested with $100 profit.
- If the borrower/invoice seller sells his invoices through Populous, they will receive Pokens from the sale which they can send to us and we will transfer them fiat currency equivalent or they can keep the Pokens and do what they want with them. The invoice seller can transfer Pokens outside the platform to his/her wallet or sell even sell on other exchanges. Pokens are worth the same as the fiat currency the inovice was sold in.
To offset the risk of default for any invoice sold by a invoice seller, There are three main things ppt do but this is on cases by case basis.
1) Credit insurance: Which is for large invoice amounts.
2) Charge on the invoice sellers company. Which is often known as a debenture registered a against the invoice sellers company.
3) Directors personal guarantee.
By taking out credit insurance the insurance company basically says they will cover the value of the invoice if the invoice sellers customer does not pay. A debenture will allow the assets of the invoice sellers company to be legal taken to settle the debt should the invoice not be paid. Directors personal guarantee would allow recovery of the debt in a worst case scenario by selling property of the invoice seller, such as his or her house.
These are used as recovery options and which are installed in the process of risk management of the invoice sale. Prior to that PPT carry our a full check on both the invoice seller and their customer in order to not get to the stage in which there would be a default.
Wow, an official response from PPT staff, I am honoured!
You are not addressing my main point; that the transaction as you have described cannot be a true sale of invoice (factoring) as long as the seller of the invoice is the one that receives payment from the customer (debtor). Even in "non-notification factoring", the buyer of the invoice (factor) assumes the identity of the invoice seller, and recovers money directly to an account controlled by them. Again, the idea that the seller should cash out on an invoice is the very antithesis of invoice factoring.
The object of credit insurance is to insure against default by the customer (debtor) who is liable on the invoice, not the risk of non-repayment by the seller. Credit insurance never insures against the moral hazard that the invoice seller refuses to repay the invoice buyer, simply because factoring transactions don't require this type of coverage when they are structured properly (not the case on Populous platform).
The next two defensive mechanisms you have outlined are typical in recourse factoring, however Populous is not a factoring platform, so again you are mixing up concepts. At best, Populous offers invoice discounting without the protections that are typically seen in those types of transactions.
If you are still insisting that Populous does offer factoring solutions (and true sale of invoices), I challenge you to find a single public internet source where factoring is described in such a manner that the 1) invoice seller is advanced funds by the factor when the invoice is sold and 2) the invoice seller recovers funds from the customer in their own bank account and 3) transfers the money to the invoice buyer's account.
If you type "How does invoice factoring work", here are the first 10 results that appear:
1) https://www.comcapfactoring.com/blog/how-does-invoice-factoring-work/
Most factoring companies purchase invoices in two installments. The first installment the factoring advance covers about 80% of the receivable (this amount varies). The remaining 20%, less the factoring fee, is rebated as soon as your client pays the invoice in full. (this clearly implies that the invoice buyer receives the funds since they rebate the 20% balance, less the factoring fee
2) https://fitsmallbusiness.com/how-invoice-factoring-works/
Step 4. Your Client Pays the Factor
Your client will pay the factor within 90 days according to the terms of the invoice.
Step 5. The Factor Forwards You the Remaining Balance (Minus Fees)
After receiving payment from your client, the factor will give you the remaining balance of the invoice, called the reserve amount, minus their fees.
3) https://www.cit.com/thought-leadership/how-does-factoring-work/
Step 3: Factoring Company Collects from Retailer
At invoice maturity, the factoring company collects from the retailer and credits the supplier's account. The factor fully manages the accounts receivable including the lock box, cash application and collection of past dues. Retailer deductions or disputes over delivery terms or product are reported to the supplier. The factor maintains the accounts receivable ledgers and provides this information to the supplier electronically via Internet reporting capabilities.
4) http://www.rtsfinancial.com/guides/what-factoring
Factoring is a transaction in which a business sells its invoices, or receivables, to a third-party financial company known as a factor. The factor then collects payment on those invoices from the businesss customers.
And so on...
Again, you can't just pull the definition of "factoring" and say Populous won't work because it doesn't fit the description. It's intentionally different. I understand your point about how the seller will receive cash from both sides, but I don't think it's accounts that they control. I don't know the mechanics for certain, but there are a couple of simple solutions that make sense so that's how I expect it to work out. It's not that hard of an issue to deal with so I'm not particularly worried that Populous is just going to leave open the risk that the Seller takes money from both sides and disappears.
Disclaimer: I'm not Populous staff...I copied/pasted the answer from PPT in page 10 of this thread...
What you're talking is Invoice Factoring....Populous is about Invoice Discounting/Financing....meaning the customer of the business is not aware of the arrangement between the Business & Lender (invoice buyer).
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.
- Borrowers or invoice sellers sell their invoices at a discount depending on the risk credit rating calculated. So an invoice may be worth $1000 and the borrower may sell it for 10% less of it's value which is $900. This will rewarded the invested with $100 profit.
- If the borrower/invoice seller sells his invoices through Populous, they will receive Pokens from the sale which they can send to us and we will transfer them fiat currency equivalent or they can keep the Pokens and do what they want with them. The invoice seller can transfer Pokens outside the platform to his/her wallet or sell even sell on other exchanges. Pokens are worth the same as the fiat currency the inovice was sold in.
To offset the risk of default for any invoice sold by a invoice seller, There are three main things ppt do but this is on cases by case basis.
1) Credit insurance: Which is for large invoice amounts.
2) Charge on the invoice sellers company. Which is often known as a debenture registered a against the invoice sellers company.
3) Directors personal guarantee.
By taking out credit insurance the insurance company basically says they will cover the value of the invoice if the invoice sellers customer does not pay. A debenture will allow the assets of the invoice sellers company to be legal taken to settle the debt should the invoice not be paid. Directors personal guarantee would allow recovery of the debt in a worst case scenario by selling property of the invoice seller, such as his or her house.
These are used as recovery options and which are installed in the process of risk management of the invoice sale. Prior to that PPT carry our a full check on both the invoice seller and their customer in order to not get to the stage in which there would be a default.
Wow, an official response from PPT staff, I am honoured!
You are not addressing my main point; that the transaction as you have described cannot be a true sale of invoice (factoring) as long as the seller of the invoice is the one that receives payment from the customer (debtor). Even in "non-notification factoring", the buyer of the invoice (factor) assumes the identity of the invoice seller, and recovers money directly to an account controlled by them. Again, the idea that the seller should cash out on an invoice is the very antithesis of invoice factoring.
The object of credit insurance is to insure against default by the customer (debtor) who is liable on the invoice, not the risk of non-repayment by the seller. Credit insurance never insures against the moral hazard that the invoice seller refuses to repay the invoice buyer, simply because factoring transactions don't require this type of coverage when they are structured properly (not the case on Populous platform).
The next two defensive mechanisms you have outlined are typical in recourse factoring, however Populous is not a factoring platform, so again you are mixing up concepts. At best, Populous offers invoice discounting without the protections that are typically seen in those types of transactions.
If you are still insisting that Populous does offer factoring solutions (and true sale of invoices), I challenge you to find a single public internet source where factoring is described in such a manner that the 1) invoice seller is advanced funds by the factor when the invoice is sold and 2) the invoice seller recovers funds from the customer in their own bank account and 3) transfers the money to the invoice buyer's account.
If you type "How does invoice factoring work", here are the first 10 results that appear:
1) https://www.comcapfactoring.com/blog/how-does-invoice-factoring-work/
Most factoring companies purchase invoices in two installments. The first installment the factoring advance covers about 80% of the receivable (this amount varies). The remaining 20%, less the factoring fee, is rebated as soon as your client pays the invoice in full. (this clearly implies that the invoice buyer receives the funds since they rebate the 20% balance, less the factoring fee
2) https://fitsmallbusiness.com/how-invoice-factoring-works/
Step 4. Your Client Pays the Factor
Your client will pay the factor within 90 days according to the terms of the invoice.
Step 5. The Factor Forwards You the Remaining Balance (Minus Fees)
After receiving payment from your client, the factor will give you the remaining balance of the invoice, called the reserve amount, minus their fees.
3) https://www.cit.com/thought-leadership/how-does-factoring-work/
Step 3: Factoring Company Collects from Retailer
At invoice maturity, the factoring company collects from the retailer and credits the supplier's account. The factor fully manages the accounts receivable including the lock box, cash application and collection of past dues. Retailer deductions or disputes over delivery terms or product are reported to the supplier. The factor maintains the accounts receivable ledgers and provides this information to the supplier electronically via Internet reporting capabilities.
4) http://www.rtsfinancial.com/guides/what-factoring
Factoring is a transaction in which a business sells its invoices, or receivables, to a third-party financial company known as a factor. The factor then collects payment on those invoices from the businesss customers.
And so on...
Again, you can't just pull the definition of "factoring" and say Populous won't work because it doesn't fit the description. It's intentionally different. I understand your point about how the seller will receive cash from both sides, but I don't think it's accounts that they control. I don't know the mechanics for certain, but there are a couple of simple solutions that make sense so that's how I expect it to work out. It's not that hard of an issue to deal with so I'm not particularly worried that Populous is just going to leave open the risk that the Seller takes money from both sides and disappears.
Disclaimer: I'm not Populous staff...I copied/pasted the answer from PPT in page 10 of this thread...
What you're talking is Invoice Factoring....Populous is about Invoice Discounting/Financing....meaning the customer of the business is not aware of the arrangement between the Business & Lender (invoice buyer).
When there is a transfer of ownership of the invoice (i.e. a "sale" of the invoice), then by definition the transaction must be factoring, not invoice discounting. Invoice discounting is a type of loan/financing that does not involve a transfer of title. The only exception in the world is the UK, where invoice discounting/financing is basically the same thing as factoring. Here is a quote from Wikipedia https://en.wikipedia.org/wiki/Factoring_(finance)#Reserve_account:
Factoring is the sale of receivables, whereas invoice discounting is a borrowing that involves the use of the accounts receivable assets as collateral for the loan. However, in some other markets, such as the UK, invoice discounting is considered to be a form of factoring, involving the "assignment of receivables", that is included in official factoring statistics. It is therefore also not considered to be borrowing in the UK. In the UK the arrangement is usually confidential in that the debtor is not notified of the assignment of the receivable and the seller of the receivable collects the debt on behalf of the factor.
Now if you tell me that Populous is going to focus only on the UK market, which represents less than 4% of global GDP, then the transaction steps they've outlined make sense. In the rest of the world, which encompasses more than 90% of the global opportunity, the transaction as described by Populous will not work. In the USA for instance, non-notification factoring represents only 12% of the total pie, and is only available to larger companies under long term contracts and based on a pool of receivables (never one-off transactions). In addition, the due diligence that invoice sellers are put through under non-notification/confidential factoring is akin to bank lending; it's thorough and complex, thereby expensive to do.
The way that Populous imagines these transactions is completely ridiculous, and provides no protection for the invoice buyers. You mentioned that under the Populous model, the sellers will pledge corporate assets while company directors are to give personal guarantees... do you really think that Populous will pay the costs involved in international litigation to recover against sellers based outside of the UK? I doubt they will do that even inside the UK, as enforcement of these types of pledges is very expensive from a legal standpoint, and wouldn't work for any facility of less than $150,000-200,000. Again, for these transactions to work, the buyer of the invoices needs to take control of the repayment from the ultimate customer. Under Populous' current model, there isn't even a notification mechanism for the invoice buyer to be informed when the invoices have been cashed out... how then is the buyer supposed to know whether non-repayment is caused by debtor default (so that credit insurance can be invoked) or by the seller's non-compliance (so that legal action can be taken against the pledges)
It makes zero sense.Re: [ANN] POPULOUS - Invoice trading platform | ICO l BOUNTY CAMPAIGN
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.
- Borrowers or invoice sellers sell their invoices at a discount depending on the risk credit rating calculated. So an invoice may be worth $1000 and the borrower may sell it for 10% less of it's value which is $900. This will rewarded the invested with $100 profit.
- If the borrower/invoice seller sells his invoices through Populous, they will receive Pokens from the sale which they can send to us and we will transfer them fiat currency equivalent or they can keep the Pokens and do what they want with them. The invoice seller can transfer Pokens outside the platform to his/her wallet or sell even sell on other exchanges. Pokens are worth the same as the fiat currency the inovice was sold in.
To offset the risk of default for any invoice sold by a invoice seller, There are three main things ppt do but this is on cases by case basis.
1) Credit insurance: Which is for large invoice amounts.
2) Charge on the invoice sellers company. Which is often known as a debenture registered a against the invoice sellers company.
3) Directors personal guarantee.
By taking out credit insurance the insurance company basically says they will cover the value of the invoice if the invoice sellers customer does not pay. A debenture will allow the assets of the invoice sellers company to be legal taken to settle the debt should the invoice not be paid. Directors personal guarantee would allow recovery of the debt in a worst case scenario by selling property of the invoice seller, such as his or her house.
These are used as recovery options and which are installed in the process of risk management of the invoice sale. Prior to that PPT carry our a full check on both the invoice seller and their customer in order to not get to the stage in which there would be a default.
Wow, an official response from PPT staff, I am honoured!
You are not addressing my main point; that the transaction as you have described cannot be a true sale of invoice (factoring) as long as the seller of the invoice is the one that receives payment from the customer (debtor). Even in "non-notification factoring", the buyer of the invoice (factor) assumes the identity of the invoice seller, and recovers money directly to an account controlled by them. Again, the idea that the seller should cash out on an invoice is the very antithesis of invoice factoring.
The object of credit insurance is to insure against default by the customer (debtor) who is liable on the invoice, not the risk of non-repayment by the seller. Credit insurance never insures against the moral hazard that the invoice seller refuses to repay the invoice buyer, simply because factoring transactions don't require this type of coverage when they are structured properly (not the case on Populous platform).
The next two defensive mechanisms you have outlined are typical in recourse factoring, however Populous is not a factoring platform, so again you are mixing up concepts. At best, Populous offers invoice discounting without the protections that are typically seen in those types of transactions.
If you are still insisting that Populous does offer factoring solutions (and true sale of invoices), I challenge you to find a single public internet source where factoring is described in such a manner that the 1) invoice seller is advanced funds by the factor when the invoice is sold and 2) the invoice seller recovers funds from the customer in their own bank account and 3) transfers the money to the invoice buyer's account.
If you type "How does invoice factoring work", here are the first 10 results that appear:
1) https://www.comcapfactoring.com/blog/how-does-invoice-factoring-work/
Most factoring companies purchase invoices in two installments. The first installment the factoring advance covers about 80% of the receivable (this amount varies). The remaining 20%, less the factoring fee, is rebated as soon as your client pays the invoice in full. (this clearly implies that the invoice buyer receives the funds since they rebate the 20% balance, less the factoring fee
2) https://fitsmallbusiness.com/how-invoice-factoring-works/
Step 4. Your Client Pays the Factor
Your client will pay the factor within 90 days according to the terms of the invoice.
Step 5. The Factor Forwards You the Remaining Balance (Minus Fees)
After receiving payment from your client, the factor will give you the remaining balance of the invoice, called the reserve amount, minus their fees.
3) https://www.cit.com/thought-leadership/how-does-factoring-work/
Step 3: Factoring Company Collects from Retailer
At invoice maturity, the factoring company collects from the retailer and credits the supplier's account. The factor fully manages the accounts receivable including the lock box, cash application and collection of past dues. Retailer deductions or disputes over delivery terms or product are reported to the supplier. The factor maintains the accounts receivable ledgers and provides this information to the supplier electronically via Internet reporting capabilities.
4) http://www.rtsfinancial.com/guides/what-factoring
Factoring is a transaction in which a business sells its invoices, or receivables, to a third-party financial company known as a factor. The factor then collects payment on those invoices from the businesss customers.
And so on...
Re: [ANN] POPULOUS - Invoice trading platform | ICO l BOUNTY CAMPAIGN
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.
Re: [ANN] POPULOUS - Invoice trading platform | ICO l BOUNTY CAMPAIGN
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.
Bitcoin bubble has burst, it is game over for all crypto assets. The bottom is not 10,000$, but rather 100$ by the end of February.
This is just like Nasdaq in 2001, or the Dutch Tulip Bulb mania in the 1600s, except on warp speed. Don't delude yourself and sell now, BTC has no intrinsic value!
https://imgur.com/a/Czeb5
https://imgur.com/EBU4Dy9
This is just like Nasdaq in 2001, or the Dutch Tulip Bulb mania in the 1600s, except on warp speed. Don't delude yourself and sell now, BTC has no intrinsic value!
https://imgur.com/a/Czeb5
https://imgur.com/EBU4Dy9
Re: [ANN] POPULOUS - Invoice trading platform | ICO l BOUNTY CAMPAIGN
Very interested as a prospective lender (investor) on Populous platform. Just finished reading the latest Whitepaper, however several questions remain unanswered. Was hoping someone has already looked into this with the team:
1) According to the Whitepaper, once an auction is completed successfully, the invoice seller receives funds from the winning buyer or group. Then once the invoice seller receives payment from his customer, he deposits the money with Populous and makes payment to settle the loan. That means that the seller will be paid twice for one invoice - once by the winning buyer (group) and once by the customer. My question is what mechanism on Populous platform will exist to oblige the invoice seller to make the payments to settle the loan, and prevent him/her from double-dipping? Usually, in factoring transactions, the factor (invoice buyer) always gets paid directly by the customer precisely to avoid this potential problem (see for example step 4 of the process described here: https://fitsmallbusiness.com/how-invoice-factoring-works/). Why is it different on Populous platform?
2) There is no mention in the Whitepaper of the verification process Populous platform will use to ensure that the invoice is valid (i.e. a real product/service has been provided and the client is happy). This is very puzzling, because invoice verification is arguably the most important part of factoring. See for example link here: https://www.comcapfactoring.com/blog/why-are-factoring-verifications-necessary/ Does anyone have any idea what process will be used to verify the validity of invoices, if any?
3) Another question unanswered by the Whitepaper is whether the factoring on the platform will be recourse or non-recourse (http://blog.factorfunding.com/blog/what-are-the-differences-between-recourse-and-non-recourse-factoring/)? If there will be recourse against the invoice seller in case of a disputed transaction, does Populous platform offer any mechanism to aid invoice buyers recover from sellers directly? Or rather, will invoice buyers have to pursue legal action in traditional tribunals? If there will not be any recourse against invoice seller in case of a dispute, then the invoice verification process will have to be very solid... (which goes back to question 2) above)
4) Finally, how will Populous will ensure that an invoice has not already been financed with another factor prior to being auctioned on the platform. I understand that tokenization will ensure that ay given invoice is sold only once on Populous platform, but what mechanism ensures that it has not been sold outside the platform to a third-party?
Would help a lot to have answers to these questions!
Thanks
1) According to the Whitepaper, once an auction is completed successfully, the invoice seller receives funds from the winning buyer or group. Then once the invoice seller receives payment from his customer, he deposits the money with Populous and makes payment to settle the loan. That means that the seller will be paid twice for one invoice - once by the winning buyer (group) and once by the customer. My question is what mechanism on Populous platform will exist to oblige the invoice seller to make the payments to settle the loan, and prevent him/her from double-dipping? Usually, in factoring transactions, the factor (invoice buyer) always gets paid directly by the customer precisely to avoid this potential problem (see for example step 4 of the process described here: https://fitsmallbusiness.com/how-invoice-factoring-works/). Why is it different on Populous platform?
2) There is no mention in the Whitepaper of the verification process Populous platform will use to ensure that the invoice is valid (i.e. a real product/service has been provided and the client is happy). This is very puzzling, because invoice verification is arguably the most important part of factoring. See for example link here: https://www.comcapfactoring.com/blog/why-are-factoring-verifications-necessary/ Does anyone have any idea what process will be used to verify the validity of invoices, if any?
3) Another question unanswered by the Whitepaper is whether the factoring on the platform will be recourse or non-recourse (http://blog.factorfunding.com/blog/what-are-the-differences-between-recourse-and-non-recourse-factoring/)? If there will be recourse against the invoice seller in case of a disputed transaction, does Populous platform offer any mechanism to aid invoice buyers recover from sellers directly? Or rather, will invoice buyers have to pursue legal action in traditional tribunals? If there will not be any recourse against invoice seller in case of a dispute, then the invoice verification process will have to be very solid... (which goes back to question 2) above)
4) Finally, how will Populous will ensure that an invoice has not already been financed with another factor prior to being auctioned on the platform. I understand that tokenization will ensure that ay given invoice is sold only once on Populous platform, but what mechanism ensures that it has not been sold outside the platform to a third-party?
Would help a lot to have answers to these questions!
Thanks