Small and medium-sized enterprises (SMEs) are the lifeblood of many healthy economies. In fact, they make up over 99% of the total number of businesses across the countries where they work, which means they are critical to adding value and employment.
Most of those firms struggle when it comes to accessing capital to sustain operations. One way to solve this issue is obtaining funds through invoice financing. However, traditional invoice financing firms require time, cost and substantial manpower.
A few FinTech firms like Finterra are already offering the public blockchain financial products such as smart invoice financing. This is basically like a regular invoice financing solution but with features enhanced by the revolutionary blockchain technology. This blockchain-based invoice financing solution allows SMEs to collect their receivables early, turning their credit sales into cash sales within a few days. It also provides other benefits such as:
- No upfront fees
- No collateral required
- Simple applications
- Quick approval
These benefits help SMEs manage their working capital, get more predictable cashflow and smooth out their monthly operations. For instance, Finterra’s FinUnion facilitates trust between the parties when they interact on the highly secured platform, which comprises of dynamic financial smart contracts, user access and processing hub, and bank API integration
With blockchain, the execution of the transactions and flow of information are not dependent on one single centralised service provider but are governed by a transparent set of rules executed on a fully distributed ledger. The traditional invoice financing solution worked to an extent but, all along, blockchain was the missing link.