Last year, the Receivables Exchange debut and is finally hitting their stride. This type of activity has taken on new importance as large companies are stetching out their payment terms expecting the small supply businesses to be their bank. Many Fortune 500 companies are now paying in 120 days! When all else has failed, small businesses need to be innovative.
The Receivables Exchange is different from other factoring operations since like eBay, banks, hedge funds, and other firms bid for your receivable. I talked with a representative of the company today and here is how it works:
1. You apply online. You need at least $1.5M in sales, be in business 2 years and submit those last two years of financial statements.
2. Once approved as a seller, you can place your receivables online. You set the amount of time you need the money, what % you need to borrow and the rate you are willing to pay.
3. When the customer pays, the money is deposited into a special Chase Bank account where you, the Receivables Exchange and the buyer divide up the money.
They have had good results so far. Average size of the auction is $50K and last 1.5 days! They state a completion rate of 99%.
1. You
