A seller sells something to buyer.
Buyer wants terms to buy now and pay later in instalments. Seller issues buyer an invoice allowing them to pay later in instalments.
Seller and Buyer approach Factorium platform to factor this invoice.
Step 1 is to ensure both are KYC complete
Once that is done the seller presents the invoice on the platform
The Buyer then confirms that the invoice is legitimately issued to them and their obligation to repay on time.
This process effectively decentralizes the process of invoice sourcing and diligence. Both buyer and seller are rewarded with FACTOR ERC 20 tokens for doing this.
Seller for submitting an invoice and Buyer for confirming its legitimacy.
The invoice is now tokenized as an ERC 20 token specific for this invoice.
These invoice tokens will be sold on the Factorium marketplace and financiers may buy them for a discount to the amount they are expected to be redeemed for.
Cash paid by financiers is paid to the sellers.
This financier can sell the invoice tokens to other financiers for whatever consideration they may agree upon. This buying and selling of invoice tokens will continue till the payment date of the invoice arrives.
On the due date the buyer pays the amount that was due under the invoice by depositing the money with the platform escrow payment account. At this point in time the Invoice tokens get burnt and the last holder receives dollar backed stable coins representing their right on the cash in the bank.
When this invoice gets paid, we may reward the buyer with a further set of reward Factor tokens to encourage regular payment behaviour.
Holders of this stable coin may redeem them for cash at any point by ensuring they are KYC complete and AML/CTF is sorted. They may also use this dollar coin to purchase other invoices available for sale on the Factorium marketplace.
Each transaction carries a small transaction fee which is payable to the platform.
We intend to immediately distribute these fees to shareholders of the platform (Konkrete investors) as a dividend. This will all be handled as part of the overall DAO smart contract we will build for the platform.
Financiers who want to supercharge their portfolio can have these transaction fees waived by triggering “happy hour” trading time for themselves. During a happy hour trading slot all transaction fees for any number of transactions are waived entirely.
The financiers will however need to have the Factor tokens to trigger these free trade time slots which they can purchase on the market place. Factor tokens are created when Buyers and sellers as explained earlier create and validate new invoices on the platform. We also reward buyers with Factor tokens for on time payments.
The Factor tokens serve an important purpose of rewarding desired behaviours which are
- Submission of legitimate invoices by sellers
- Confirmation of invoices that are issued to them by buyers
- Payment of these invoices on time by buyers
Also by waiving fees in time slots when these Factor tokens are being used by financiers, we also create urgency on the part of the financier to buy as many invoices as possible in a short period of time which further boosts the viability of the platform.
The amount of tokens given to buyers and sellers for submitting, validating and paying invoices will steadily decline with time. This is done to reward early adopters of the platform.