Blockchain Invoice Financing with Smart Contract Verification

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Solution Overview

Problem

Current invoice and credit financing solutions lack transparency, security, and global applicability, often involving intermediaries that can lead to fraud and inefficient cash flow management for suppliers, particularly in B2B eCommerce, and fail to effectively determine credit risk across different countries.

Innovation Solution

A system utilizing a blockchain-based distributed ledger with cryptography for secure, verifiable transactions, enabling suppliers and buyers to obtain funding based on invoices or credit worthiness, with smart contracts for automated processes and fraud prevention, directly connected to Procure-to-Pay systems for lower costs and enhanced transparency.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If traditional invoice financing solutions are used, then suppliers can obtain funding quickly, but transparency and security are compromised due to intermediary involvement

Engineering Contradiction:

ImprovetransparencyVSAvoidintermediary involvement

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent removes the intermediary from the invoice financing process by implementing a direct peer-to-peer platform where suppliers can list invoices and buyers or financiers can purchase them directly. This extraction of the intermediary function eliminates the information asymmetry and fraud risks associated with traditional intermediaries, while maintaining the quick funding benefit.

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The patent introduces a blockchain-based system as a new type of intermediary that provides transparency and security without traditional intermediary involvement. The blockchain serves as a distributed ledger that records all transactions immutably, enabling trust between parties without requiring a central intermediary to mediate the process.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Productivity

If intermediaries are used in financing processes, then matchmaking and auctioning can be facilitated, but fraud occurs through information alteration

Engineering Contradiction:

Improvetransaction volumeVSAvoidfraud

Core Design Contradiction:

ProductivityVSObject-affected harmful factors

Solution Approach 1:

The patent implements real-time feedback mechanisms through the blockchain system where transaction information is immediately recorded and verified. The system provides continuous feedback on invoice status, payment conditions, and transaction completion, enabling automatic verification that prevents fraud while maintaining high transaction volume through automated processes.

Inventive Principle:

Principle #23Feedback

Solution Approach 2:

The patent uses disposable cryptographic hashes and digital signatures that can be verified once and then discarded. Each transaction creates a unique cryptographic record that prevents alteration, allowing the system to handle high volumes of transactions securely without requiring expensive or complex verification mechanisms for each individual transaction.

Inventive Principle:

Principle #27Cheap short-living objects (Disposable)

3Ease of operation

If credit financing solutions are provided, then buying experience is enhanced, but credit risk determination remains difficult across different countries

Engineering Contradiction:

Improvebuying experienceVSAvoidcredit risk determination

Core Design Contradiction:

Ease of operationVSMeasurement precision

Solution Approach 1:

The patent creates a universal credit assessment system that works across multiple countries and industries by using standardized cryptographic verification and blockchain records. The system can evaluate credit risk for buyers anywhere in the world by accessing their transaction history and financial information stored on the blockchain, providing consistent credit risk determination globally while maintaining an enhanced buying experience.

Inventive Principle:

Principle #6Universality (Multi-functionality)

4Productivity

If automated financing processes are implemented, then efficiency is improved, but transparency in pricing and processes is reduced

Engineering Contradiction:

Improveautomation efficiencyVSAvoidpricing transparency

Core Design Contradiction:

ProductivityVSLoss of information

Solution Approach 1:

The patent replaces traditional mechanical or manual pricing processes with automated blockchain-based smart contracts that transparently display all pricing information. The system uses programmable conditions that automatically execute transactions based on predefined criteria, maintaining efficiency while providing complete transparency in pricing and process parameters through the immutable blockchain record.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS10956973B1System and method for verifiable invoice and credit financing

Publication Date: 2021.03.23 LEDGERFUNDING INC

AI summary

A system and method for supporting verifiable invoice and credit financing in a verifiable manner across a plurality of different platforms.