ReceivablesExchange the largest of the Online Invoice Auction Exchanges David Gustin - December 10, 2014 2:57 AM | Categories: Receivables Finance | Tags: Alternative & P2P Lending, altfin, Fintech, MarketInvoice, Platform Black, receivable auctions The Receivables Exchange (RecX) describes itself as the leading online exchange for the sale and purchase of accounts receivable. Receivable auction platforms have received much press recently with MarketInvoice securing new financial backing, GLI Finance investing in several platforms, and new exchanges being established in various countries (eg. Germany, Sweden, Russia). But RecX was the first. Their online marketplace to auction single invoices that were not credit enhanced began in April 2007 for small and midsize businesses. The idea at the time was to create a network of institutional buyers who compete to buy invoices via a real-time marketplace. There is a whole history here which involves much deeper analysis, but when RecX partnered with the NYSE in September 2011, their focus switched from small business to the large corporates. They established the Corporate Receivables Program (CRP) to market auctions to large private and publicly-held companies. RecX shuttered their Small Business Division back in 2012 and are now focused entirely on the large private and publicly traded companies. The platform connects these companies to diversified sources of liquidity, including community/regional/international banks, large family offices, hedge funds, pension funds, and other institutional buyers. To date the majority of capital comes from banks, specifically regional banks and foreign institutions with activities in the U.S. Globally, let’s just say the current size of the market is extremely small, and each vendor operates a platform within their domestic market. The U.K. has seen several vendor offerings with online auction capabilities in reaction to the Governments push for more proactive SME lending. Since its inception, RecX has generated over $3.5bn in funded volume. It recently release some high level data on its funding volume in a short press release. There are many lessons learned from the RecX experience which are too short to cover in a post. Bear in mind these platforms do not take a principal interest in the invoice. They are pipes to bring Buyers and Sellers together, which is never an easy job, especially when selling money. In RecX case, their chief challenge with the Corporate program is they need to line up the liquidity to finance a division of a major global 2000 such as Lockheed or Honeywell. As in any market, every transaction over RecX needs both a buyer and a seller. Most large corporates will compare their Commercial paper rates, which is a well established market, to a pool of investors that can find alternatives at a moment’s notice. Other receivable auction platforms struggle to build a scalable, profitable business due to the high costs of customer acquisition. But that does not stop the dream (or the investors or entrepreneurs) from developing these altfin solutions. As I mentioned in my post on risk mitigation, the devil is in the risk mitigation detail. I am researching this segment in more detail, and if interested in the output, please contact me at firstname.lastname@example.org Related Articles First Voice Douglas Schoch: 19.01.2015 at 8:24 am Hello David – Doug Schoch checking in. I may be in the market in 2015 – 2016 to explore placing a portion of our USD A/R portfolio on an auction site. Any further research on this service category will be of interest. Reply Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of new posts by email.