System and Method of Transaction Settlement Using Trade Credit

Abstract

A method and system for settling a transaction with trade credit value which makes use of computer hardware and software, allows Members of a trade credit settlement system to transfer electronic instruments, called trade credits, in exchange for goods and services. These trade credits are effectively electronic bills of exchange that are divisible, transferable, discountable, continuously available and have been credit-enhanced to A / P1 status. Sponsors facilitate the system by registering buyers and suppliers as Members in the system and offering them operational accounts and drawdown accounts with authorized lines of credit. A Member-buyer approves the purchase invoice of a Member-supplier and authorizes the Sponsor to transfer trade credit value from the Member-buyer's operational and / or drawdown account into the operational account of the Member-supplier. The trade credit value received by the Member-supplier can be held in the Member-supplier's operational account until it matures, or discount it to cash before it matures, or transfer it to other Members for the purchase of goods or services.

Description

CROSS REFERENCE TO RELATED APPLICATIONS[0001]This application is a continuation of co-pending U.S. patent application Ser. No. 09 / 626,838 entitled “System and Method of Transaction Settlement Using Trade Credit” filed Jul. 27, 2000, which is hereby incorporated by reference in its entirety and which claims the benefit of U.S. Provisional Application No. 60 / 146,760 filed Jul. 30, 1999 and U.S. Provisional Application No. 60 / 193,075 filed Mar. 28, 2000, each of which is incorporated herein by reference in its entirety.FIELD OF THE INVENTION[0002]The present invention relates generally to the field of transaction settlements and more particularly to a system and method for settlement of a transaction using trade credit.BACKGROUND OF THE INVENTION[0003]Currently, a significant issue in the business sector is the problem of late payments between customers and suppliers. While legislation has been enacted from time to time, for example, in the U.K. and in Europe, there has been no legisla...

AI Technical Summary

Benefits of technology

[0006]It is a feature and advantage of the present invention to provide a system and method of trade credit settlement which dramatically lowers the cost of additional working capital for both buyers and suppliers who are registered as trading members (also referred to herein as “TMs,”“members,” or “Members,”) of a trade credit settlement system (also referred to herein is “Orbian system”).

[0007]It is another feature and advantage of the present invention to provide a system and method of trade credit settlement that enables deferred cash settlement of trade debt, while simultaneously improving supplier liquidity.

[0008]It is an additional feature and advantage of the present invention to provide a system and method of trade credit settlement which enables one hundred percent access of the income from a sales invoice immediately following buyer approval of the invoice.

[0009]It is a further feature and advantage of the present invention to provide a system and method of trade credit settlement which assures a rapid, low cost settlement between buyers and suppliers.

[0010]It is still another feature and advantage of the present invention to provide a system and method of trade credit settlement which assures a substantial reduction in back-office processes and costs.

[0011]It is still another feature and advantage of the present invention to provide a system and method of trade credit settlement which affords a profitability increase to both buyer and supplier.

Problems solved by technology

Currently, a significant issue in the business sector is the problem of late payments between customers and suppliers.

While legislation has been enacted from time to time, for example, in the U.K. and in Europe, there has been no legislation that is reckoned to solve the problem.

However, such paper instruments have a number of problems associated with their use, such as difficulties in transferability.

They are not deliverable, and they are not really in any sense fungible, mainly because they are a wholly disparate credit family.

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