An Invoice Exchange is an on line platform where businesses can offer non-recourse receivables arising from trade invoices to institutional investors, provided that these invoices are payable and not overdue. Buyers and sellers negotiate the value of these invoices directly on the platform.
CrowdCity SpA is the legal entity that realised the platform and that manages its technical functioning. Additionally, CrowdCity SpA manages the database of documents and information made available by users of the platform. Lastly, it provides assistance with every activity carried out on the platform.
An independent company registered to the Albo dei Mediatori Creditizi performs an initial due diligence relying on the documents gathered by the platform. Selling businesses authorised to upload their invoices have an 80% chance of selling their invoices if they apply the discount rate suggested by the credit broker.
The valuation is focused on the credit worthiness of both the transaction (hence the single invoice) and the original debtor being assigned. In any case, investors should perform their own due diligence before entering into any transaction.
Receivables are assigned by sellers on a non-recourse basis. It means that default risk is exclusively borne by investors that can oppose legal actions only towards the original debtor. Nonetheless, late payments or any other breach of contract can either compromise the ability of assigning businesses to access the platform or penalise their credit standing for future transactions.
Definitely, since the investor evaluates the convenience of the transaction mainly upon the credit worthiness of the principal debtor (synthetized in its rating). While performing their due diligence, investors may take into account the financial position of the sellers but these considerations are never impedimental to the validation of the assignment proposal.
Invoices of a minimum nominal value of € 1.000 issued to other private businesses that generate yearly revenues of at least € 5.000.000.
90% is collected within two working days from the buyer’s formal acceptance of assignment while the balance of 10% is settled as the investor cashes in the original debtor.
A contract of assignment is formed when a formal acceptance is returned to the offeror’s proposal. The buyer and the seller communicate via correspondence and both have to digitally sign the letter of proposal and the letter of acceptance.
The platform is responsible for all aspects concerning the notification process which is fully automated through certified e-mails.
The platform does not actually handle cash transfers but takes care of every aspect of the transaction by making sure all the parties perform their respective duties. For example, the buyer receives a message that contains the bank account details of the seller while, with respect to the final payment to the investor, the original debtor receives, along with a formal notification, all details necessary to extinguish its debt.
The time required to complete a transaction depends on a number of variables such as the ticket size, the maturity, discount rate, rating of the principal debtor, etc.
Besides the discount rate agreed between the seller and the buyer, both parties pay a one-off fee the first time they subscribe the platform service. The discount rate includes a commission that depends on the size of the invoices being assigned, which is to be considered gross of Value Added Tax.