Soliditet takes the risk out of invoice auctions

Fakturabörsen (European Factoring Exchange AB) is an online service enabling Swedish companies to sell their invoices to the highest bidder – at significantly higher prices than those offered by factoring companies. Solidetet allows auction participants to assess their credit risks and steer clear of fraud.

Thanks to the internet, it has now become far easier to compare the various alternatives available on the market. Fakturabörsen, the most recent addition, arranges daily online auctions which allow companies themselves to sell their invoices to the highest bidder.

“Growing numbers of companies – who have previously moved away from factoring – now see us as an attractive financing option, as we have slashed the cost of factoring by around 30 per cent,” explains Roni Bicér, CEO at Fakturabörsen.

The factoring market has been growing at a brisk pace since the 1990s, meeting the requirements of companies in need of a quick boost to liquidity, unable to operate on credit terms of 30 or 90 days, nor accept the restrictive high-interest solutions offered by banks.

“The factoring companies have exploited this imbalance, setting pretty much whatever price they wished. The losers, however, have been the small and mid-sized companies, who, in many cases, have received derisory sums for their invoices.”

Not even companies selling invoices made out to AAA-rated firms receive more than between 93.5 and 95 per cent of the invoice sum, after fees. On the Fakturabörsen auction, however, the selling company receives on average 98 per cent of the sum of the equivalent invoice category.

“The majority of invoices are purchased by major institutional investors, such as funds and asset managers, who see Fakturabörsen as a reliable alternative to the regular, more volatile stock exchange,” Roni explains.

That invoice purchase is considered to produce reliable returns is in no small way down to Soliditet. The Fakturabörsen auction site publishes the Rating, as well as the Paydex (Payment Index) for every invoice recipient.

“Because purchasers can see the credit risk of the invoice, in addition to the risk of late payment, it is easier to assess the overall level of risk, and consequently, the price they are prepared to pay.”

Moreover, all buyers and sellers are scrutinised by Fakturabörsen prior to their admission to the auctions. This includes analysis of their credit worthiness through Soliditet Decision Support, as well as checks made by Soliditet Fraud Solutions, in order to sift out fraudsters and fake invoices.

“Our customers are not bound by any contractual obligations. Just like at a normal auction, customers are free to buy and sell as much or as little as they wish,” adds Bicér.


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