I meant to write about The Receivables Exchange a while ago - I first stumbled upon them through an article in Inc magazine which struck me as a really interesting business model worth investigating.

Receivables Exchange in a nutshell is a marketplace for receivables (open invoices) - they basically took the age-old model of invoice factoring, shook the existing business model quite a bit and created an open exchange where companies who want to sell invoices and companies who are willing to buy them for a discount (their spread) come together. It’s an interesting approach - basically looking at an industry which is notoriously closed and intransparent and bringing a maximum of transparency into it. It might not be the sexiest industry - factoring is often referred to as the ugly pig of financing (which generally means there are not many competitors). It will be interesting to see how they perform under the current market conditions - theoretically they should be able to profit handsomely as a lot of small and medium sized companies have massive problems getting cash from their banks.

The company is an interesting case study as they went into a market which is not tremendously obvious (it’s not the next social network for dog lovers), it’s B2B (hey - B2B was sexy once… where is all the glitter gone?), it has a business model (and a robust one) and it’s a marketplace (thus bringing transparency into notoriously intransparent markets). Good to read and think about - here’s the Inc article.

Posted in Analysis