Micro-Factoring in the Supply Chain
Find out how Factor Chain is changing the game for smaller businesses within the supply chain.
Key Takeaways:
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Factor chain uses operational and market data to identify opportunity and price risk, and is able to deliver Just-In-Time-Finance.
- Routeique's data allows FactorChain to micro-factor every invoice that is generated for customers, enabling businesses to more easily access micro-loans in order to buy products as well as to bridge the gap between invoicing and collections.
- Routeique and FactorChain together can provide network health scores, power more accurate lending, and help companies deal with longer payment times.
FactorChain provides infrastructure for lending institutions, funds, banks, crypto, third-party lenders, and anyone who lends money as debt. They are not a bank, but they provide loans and funding into the supply chain—in other words, they originate credit. FactorChain is changing the game by analyzing supply chain data.
The great benefit of FactorChain is that it strategically provides access to capital for small businesses. FactorChain notes that this is essential because:
- 27% of small companies can’t access the capital they need to grow
- 46% of businesses survive on the owner’s credit card
- 80% of global trade is covered by credit or short-term payment guarantees, and over $10 trillion in annual flows
How FactorChain Works
“What we really do on a basic level is we provide loans or funding into the supply chain. So we originate credit, but we try to do it in a little bit different way. Our positioning is we're not a bank. So what we try to do is, from that perspective, we're trying to be a little bit more friendly. We try and also to utilize as much as possible data. So those are the those are the big areas.”
- Bill McGraw, President of Factor Chain (Edited for clarity)
FactorChain uses operational, financial, and market data to identify opportunity and price risk, and is able to deliver Just-In-Time-Finance.
“So there's a whole risk assessment component that needs to be put in place,” Bill says of lending. “But at the same time, by looking at certain aspects of a business which really gets us, you know, the qualitative parts of the data. So there's the quantitative, which is what we're talking about. You know, what does your financials look like? How much did you sell last? What's your margin? How much have you gotten inventory and what's your default rate? Things like that. Those are all still important. But then there's these other aspects. So like what industry are you in and what's the macro of the demand? Because you may or may not be able to show me specifically or you may say, Oh, yeah, look, I can sell a lot more of this product, but you look at the marketplace and go, Well, what's going on in the market? What else is happening that makes sense or informs me more about whether this is a good use of lending. And then you make the correlation between, you know, providing a smaller amount of funding for a shorter period of time, specifically targeted to a product or a campaign or something like that. And, and prove that that's viable.”
Our Work With FactorChain
Routeique’s data helps FactorChain to enable AI-based smart lending. This allows FactorChain to micro-factor every invoice you generate for customers. This allows you to access micro-loans in order to buy products as well as to bridge the gap between invoicing and collections. Let’s take a closer look below.
Enabling The Purchase of Additional Materials
Because it is able to look into the flow of transactions through the warehouse, FactorChain can help provide loans for the expansion of equipment. For example, if a business needs extra funding to expand its frozen storage, FactorChain can analyze throughput and validate this decision as well as the loan amount. Analyzing this data can also examine the optimal type of inventory to store in the section to boost profits.
Enabling The Purchase of Expanded Inventory
Similar to the above, FactorChain can provide short-term loans for inventory purchases, to enable businesses to accelerate sales.
Find out More
To find out more about FactorChain, you can visit them online, or watch our podcast featuring Bill McGraw, FactorChain’s president.
