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The Receivables Exchange
The Receivables Exchange is a New Orleans based company that operates ReceivablesXchange.com, an online auction marketplace for the trading of accounts receivable. Traditionally, the only resource that small and mid-size businesses have for generating working capital, alternative to a bank loan or line of credit, has been factoring. The purpose of this marketplace is to provide a new source of accounts receivable financing for small and mid-sized business-to-businesses companies.

There are two primary types of institutions who interact through this online marketplace. As in any market, they are called Sellers and Buyers. Sellers are private and public business to business companies who wish to accelerate cash flow. These companies sell one or multiple accounts receivable at a discount through live auctions. Buyers, are accredited financial institutions such as banks, hedge funds and asset-based lenders. These institutions participate on the Exchange with the goal of making investments by purchasing the accounts receivable that Sellers put up for auction. They competitively bid on auctions that appeal to them based upon the financial stability of the Seller and the Seller’s customer, whose invoice is being sold.

Business Model
The Receivables Exchange has a transaction-based business model. Transactions on The Receivables Exchange begin when a Seller chooses to list an invoice for sale. Similar to setting up an auction on Ebay with a reserve, Sellers determine the length of the auction (3-10 days) and the types of offers that they want. Specifically, the seller sets a maximum discount that they will give to a buyer for purchasing the invoice. They also set a minimum percentage of the invoice that they need up-front in cash (the Advanced Rate). These two rates are the variables that Buyers bid on. If the Seller’s discount and advanced rate are not met, then the invoice is not sold. If a Buyer meets these requirements, then the best bid wins. Sellers can also set a buy-out price for the auction. If this price is met, then the receivable will be immediately sold to the first Buyer who makes that bid.

The Receivables Exchange takes the responsibility of checking the background of both Buyers and Sellers so that fraud and financial complications are prevented. The Receivables Exchange also directs payments electronically between Buyers and Sellers. 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 US Dollars.

The Receivables Exchange went live to the public on November 17, 2008. It was founded by Justin Brownhill, executive and strategic advisor to the capital markets, financial services and software sectors and Nicolas Perkin, a former CFO and a successful entrepreneur. The company is backed by Fidelity Ventures and Prism VentureWorks. As of February 26, 2009, The Receivables Exchange secured its B round of Financing lead by Redpoint Ventures with re-investment by Prism Ventureworks.