The Receivables Exchange
The Receivables Exchange is an online marketplace where businesses buy and sell their accounts receivable, through real-time auctions. Businesses (Sellers) can post one or multiple receivables for sale through a competitive auction process. Sellers control all of the pricing parameters, setting the minimum advance they are willing to accept and the maximum fee they are willing to pay. Accredited Institutional Investors (Buyers) bid on the receivables in real-time. The best bid that meets the Seller’s parameters wins the auction.
Business Model
The Receivables Exchange has a transaction-based business model. Transactions begin when a Seller chooses to list one or more receivables for sale. Similar to setting up an auction on eBay, Sellers determine the length of the auction (3-10 days) and control all of the pricing parameters, setting the minimum amount they are willing to accept for selling their receivable(s) and the maximum fee they are willing to pay the Buyer. Buyers compete against each other, bidding to purchase the receivables offered in the auction. If the Seller’s terms are not met, the receivables are not sold. If a Buyer meets these requirements, then the best bid wins. Sellers also have the option to set a Buyout Price for the auction, much like the ”Buy It Now” option on eBay. If a Buyer agrees to the Buyout Price then the auction closes immediately and the Seller is funded early regardless of the auction end date. All auctions remain open for the time period established by the Seller or until the Seller’s pre-determined Buyout price is met. When the auction closes, the Seller receives their funding the next day. The transaction is complete when the Seller’s customer remits payment and the Buyer is paid the amount due, which is the advance amount plus any accrued fees, while any remaining amount goes back to the Seller. If the receivables remain unpaid, the Seller is obligated to repurchase it from the Buyer.
The Receivables Exchange takes the responsibility of verifying the identity of Buyers and Sellers and manages payments electronically between both parties. The Receivables Exchange generates revenue through trading fees on completed transactions, one-time registration fees from Sellers and membership fees from Buyers. All transactions are in U.S. Dollars.
History
The Receivables Exchange (TRE) is owned and operated by its parent company, The New Orleans Exchange, headquartered in New Orleans, LA. TRE launched its trading platform on November 17, 2008. It was co-founded by CEO Justin A. Brownhill, a strategic advisor to the capital markets, financial services and software sectors and President Nicolas Perkin, a successful entrepreneur and former CFO. The Receivables Exchange received Series A funding from Fidelity Ventures and Prism VentureWorks in October 2007. It announced its Series B funding on February 26, 2009 with financing led by Redpoint Ventures and re-investment from Prism VentureWorks.