How Bulla Network is Pioneering Onchain Invoice Financing

Managing cash flow is one of the biggest challenges for any business, whether it’s a small retail operation or large multinational corporation. And the fact that debtors have been negotiating longer and longer settlement periods over the last five years is creating an even bigger challenge.

To maximize liquidity, traditional bank loans are usually not an option, due to long tenors and burdensome processes. Factoring companies, the most common choice among business owners, can bridge the gap but many charge high rates and require onerous terms.

However, after many decades without innovation in the settlement industry, there is now a disruptive solution: Bulla Network is leveraging the blockchain to settle invoices faster, cheaper and more inclusively through the provision of liquidity pools.

The Challenge with Traditional Financing

In traditional finance, banks offer loans after conducting a rigorous due diligence process. They assess the company’s financial health, credit history, and risk factors, using a time-consuming process that doesn’t always end with approval. For companies in urgent need of liquidity, this wait can create crucial and costly business interruptions. Additionally, businesses deemed too high-risk for bank loans often have limited options and may have to turn to alternative financing methods like invoice factoring.

Invoice Factoring: A Brief Overview

Invoice factoring has long been a popular financing option for companies with outstanding invoices, providing them with immediate access to capital. In a typical scenario, a factoring company pays an advance (usually 70-80% of the invoice value) and later releases the remaining balance, minus fees, when the invoice is fully paid by the customer. This offers businesses rapid liquidity and is crucial for those needing funding outside traditional lending frameworks.

The High Cost of Traditional Invoice Factoring

Traditional factoring companies face significant challenges in due diligence, which drives up costs. The due diligence process, which verifies both the borrower’s and the customer’s credibility, often involves exchanging PDF invoices, financial statements, and manual data entries, a process prone to fraud and inefficiencies.

How Bulla Network’s Invoicing Solution Enables Seamless Liquidity

Because it utilizes “single source of truth” technology, which makes all users’ data transparent and immutable, the blockchain can drastically reduce manual effort, cut down on administrative costs, and minimize the chance for fraud.

With blockchain, there’s no need for back-and-forth emails with non-standardized PDF invoices. Instead, the blockchain provides a single source of truth, enabling instant verification of invoice data.

With Bulla, you can mint an invoice onchain and, if you are interested in financing the invoice, you could propose it to a Bulla Finance pool, which sets its own custom contract terms. If you agree to the terms, then you can execute the contract.

Borrowers’ real-time records of payment histories and basic financial information are then immutably onchain, eliminating the need for repetitive data entry and reducing the risk of falsified invoices. And, once a borrower has a track record, they can negotiate for better terms. For example, the first invoice you finance could possibly have a factor ratio of 50% and a discount of 3%. But then once you get a track record, the terms should improve.

Liquidity Pools Enable Fast Settlement

Liquidity for the invoice settlement is enabled by pools funded by accredited investors. The pools provide accredited investors with rare access to the yield on commercial paper, an opportunity usually only afforded to large banks.

Bulla Network’s Onchain Invoice Settlement Solution: Key Benefits

The introduction of onchain settlement through Bulla Network brings three primary advantages:

• Flexible, Faster Access to Funds: Bulla Network’s platform uses smart contracts and allows for customized terms, giving businesses greater flexibility in programming the timing of invoice settlement. This adaptability, combined with rapid turnaround times, empowers businesses to access cash quickly without committing to lengthy loan terms.

• Lower Costs: By automating many manual processes, Bulla Network lowers overhead costs, allowing for more competitive rates. This transparency and efficiency in the process reduces the need for costly audits and fraud prevention measures, making financing accessible to more businesses.

• A More Sovereign, Inclusive and Growth-Oriented System

By using the Blockchain, Bulla eliminates the bank or finance middleman. Not only does this streamline the process, but it opens up the market for more investors to participate, which will inevitably bring prices down and enable companies to raise working capital and grow more easily.

• Reduced Fraud Risk: Blockchain’s transparency and immutability make it easier to detect fraudulent activity, while the unified data system prevents manipulation of records, significantly reducing the chance of lapping schemes and other types of factoring fraud.

A New Era for Invoice Financing with Bulla Network

Bulla Network’s blockchain-based invoice factoring is transforming how businesses access capital, particularly those that traditionally struggled to secure bank loans. By leveraging the efficiency and security of blockchain technology, Bulla Network provides a solution that is faster, more affordable, and far more secure than traditional factoring.

Bulla Network is more than just a platform for invoice factoring; it’s a comprehensive solution to modern cash flow challenges, driving innovation in the invoice factoring industry with onchain solutions tailored to the needs of today’s businesses.