The Receivables Exchange is an online marketplace where businesses sell their accounts receivable

Accounts receivable

Accounts receivable also known as Debtors, is money owed to a business by its clients and shown on its Balance Sheet as an asset...

 to accredited investors in realtime auctions, accessing capital in as little as 2 business days, on flexible terms. It is claimed to eliminate many of the constraints of traditional financing.

Businesses (Sellers) can post one or multiple receivables for sale through a competitive auction process. Sellers control all of the pricing parameters, setting the minimum advance they are willing to accept and the maximum fee they are willing to pay. Accredited Institutional Investors (Buyers) bid on the receivables in real-time. The best bid that meets the Seller’s parameters wins the auction.

In September 2011, NYSE Euronext announced that it acquired a minority stake in The Receivables Exchange. The company was named the most innovative e-commerce company in the world for 2010 by The Wall Street Journal.

How It Works

The Receivables Exchange is an online marketplace that lets businesses sell receivables to institutional investors in a real time auction. Transactions begin when a Seller chooses to list one or more receivables for sale. Sellers determine the length of the auction (3–10 days) and control all of the pricing parameters, setting the minimum amount they are willing to accept for selling their receivable(s) and the maximum fee they are willing to pay the Buyer. Buyers compete against each other, bidding to purchase the receivables offered in the auction. If the Seller’s terms are not met, the receivables are not sold. If a Buyer meets these requirements, then the best bid wins. Sellers also have the option to set a Buyout Price for the auction. If a Buyer agrees to the Buyout Price then the auction closes immediately and the Seller is funded early regardless of the auction end date. All auctions remain open for the time period established by the Seller or until the Seller’s pre-determined Buyout price is met. When the auction closes, the Seller receives their funding the next business day. The transaction is complete when the Seller’s customer remits payment and the Buyer is paid the amount due, which is the advance amount plus any accrued fees, while any remaining amount goes back to the Seller. If the receivables remain unpaid, the Seller is obligated to repurchase it from the Buyer.

The Receivables Exchange manages the identity verification process and registration of Buyers and Sellers and coordinates payments electronically between both parties. The Receivables Exchange generates revenue through trading fees on completed transactions, one-time registration fees from Sellers and membership fees from Buyers. All transactions are in U.S. Dollars.

History

The Receivables Exchange is owned and operated by its parent company, The New Orleans Exchange, headquartered in New Orleans, LA. The Receivables Exchange launched its trading platform on November 17, 2008. It was co-founded by CEO Justin A. Brownhill, a strategic advisor to the capital markets, financial services and software sectors and President Nicolas Perkin, a successful entrepreneur and former CFO. The Receivables Exchange received Series A funding from Fidelity Ventures

Fidelity Ventures

Fidelity Ventures is the venture capital arm of Fidelity Investments. Based in Boston, Massachusetts and London, Fidelity Ventures invests in emerging technology companies in North America and Europe. Their focus is on the go-to-market stage, where companies have products and early customer...

 and Prism VentureWorks in October 2007. It announced its Series B funding on February 26, 2009 with financing led by Redpoint Ventures

Redpoint Ventures

Redpoint Ventures is a prominent venture capital firm focused on investments in early stage technology companies. The firm's partners include Allen Beasley, Jeff Brody, Satish Dharmaraj, Tom Dyal, Tim Haley, Brad Jones, Nety Krishna, Chris Moore, Lars Pedersen, Scott Raney, John Walecka, Geoff...

 and re-investment from Prism VentureWorks. On January 27, 2010, the Exchange announced that it closed $17 million in Series C financing led by Bain Capital Ventures

Bain Capital Ventures

Bain Capital Ventures is the Boston-based venture capital affiliate of Bain Capital. Bain Capital Ventures' history dates back to 1984, with investments in over 110 early and growth stage companies such as Staples, DoubleClick, Aspect Development, Shopping.com, Taleo Corporation, SolarWinds,...

 , with additional commitments from existing investors Redpoint Ventures and Prism Ventureworks. In September 2011, NYSE Euronext announced that it acquired a minority stake in The Receivables Exchange, and launched a joint strategic initiative to market the Corporate Receivables Program to potential sellers, including New York Stock Exchange listed companies.

Growth

The Receivables Exchange has experienced steady growth since its launch in 2008. In August 2010, the company announced that trading volume on its market-based platform increased 300% year-to-date as of July 31. The company also announced that by selling receivables on the Exchange, businesses are lowering their cost of capital by 30%, on average. More than 50% of trading volume on the Exchange comes from account debtors with publicly rated debt, of which more than 94% is investment grade. The Exchange has Sellers in 49 states and 45 industries. Industries with high activity levels included manufacturing, wholesale and distribution, professional services, business support, media and technology.

Recognition

The Receivables Exchange continues to be recognized by international media and influential business groups for its impact in the financial services sector. On September 27, 2010, The Receivables Exchange was named the winner in the e-commerce category of The Wall Street Journal's 2010 Technology Innovation awards, which recognize the most important innovators in technology worldwide. In July 2010, the Exchange was named to Institutional Investor magazine’s 2010 “Tech 40” list, recognizing the most groundbreaking financial technology companies in the world. Chief Executive Officer and Co-Founder Justin Brownhill was named one of Silicon Alley Insider’s “Silicon Alley 100” for 2010, a Regional Finalist for the Ernst & Young “Entrepreneur of the Year” Award and a National Finalist for the American Business Awards.

External links

• The Receivables Exchange website