Singapore-based volofin will offer a blockchain invoice financing system for backers and small to medium-sized businesses (SMBs) in Singapore, India and the United States at the beginning of April, Reuters reported on Tuesday (March 23), citing the firm’s chief executive.
Volofin Chief Executive Mohit Agarwal said, per the newswire, that the entire factoring workflow occurs on the blockchain system. “Investors’ money is held in escrow. They can see where it’s invested and can stipulate the parameters of their investments,” Agarwal said, as per Reuters.
The firm will be responsible for every action on the system such as transaction handling, documentation and due diligence, among other activities, the chief executive said per Reuters.
Through a procedure referred to as factoring, businesses sell invoices to financing firms for less than they are worth and those financing firms, in turn, usually have investors buy them.
Factoring is turning into a pivotal source of finance for SMBs, as financial instructions become less involved in trade finance.
SMBs such as iQuartz previously had to deal with lengthy processes that weren’t automated — in addition to complex paperwork — as they took part in global trade with international suppliers.
With the help of Trusple, however, the trade order from iQuartz was immediately recorded on the blockchain, bolstering transparency and giving iQuartz more control over its supply chain. DBS will also facilitate payment to the company’s supplier without intervention via the technology once the trade commitment has been met and acknowledged digitally.
SMBs can also purchase invoice financing and seek bank payment guarantees via the platform.
“By leveraging emerging technologies such as blockchain, DBS is lowering the barriers for [SMBs] to participate in Asia’s post-pandemic economic revival as cross-border trade activity in the region picks up,” Joyce Tee, group head of small and mid-size enterprise (SME) banking for DBS, said in a recent press release.