Specialty finance firm VoloFin will launch a blockchain invoice financing platform on April 1 for investors and small and medium-sized firms (SMEs) in the United States, India and Singapore, its chief executive has revealed.
Invoice or receivables financing through a process known as factoring involves companies selling invoices at a discount to financing companies, which then typically sell them to investors.
With banks increasingly stepping away from trade finance due to capital requirements, factoring is becoming an important source of finance for SMEs.
“The whole factoring process is conducted on the blockchain platform. Investors’ money is held in escrow, they can see where it’s invested and can stipulate the parameters of their investments,” VoloFin Chief Executive Mohit Agarwal said.
Buyers of the products produced by the SMEs will typically be located in developed countries including the United States, Europe, Japan, South Korea and Australia, he said.
VoloFin, which is headquartered in Singapore, will take responsibility for all activities on the platform including due diligence, compliance, documentation, transaction processing, credit appraisal and monitoring, Agarwal said.