Dynamic Discounting Auction Platform for Trade Debt
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Solution Overview
Problem
Conventional systems for discounting short-term trade debt lack efficiency in dynamically discovering individualized credit terms acceptable to multiple creditors, leading to suboptimal discounting practices and inefficient payment processing.
Innovation Solution
An optimized collaborative auction platform that enables real-time, condition-based multi-party price discovery for homogeneous assets and liabilities, allowing for dynamic bidding and eligibility determination based on discount rates, auction goals, and hurdle rates, ensuring that each bid is evaluated for acceptance without revealing information to other bidders.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If conventional discounting arrangements with fixed terms are used, then processing is standardized and straightforward, but the system cannot dynamically discover individualized credit terms acceptable to multiple creditors
Solution Approach 1:
The patent segments the credit term negotiation process into discrete bidding rounds, where each bidder submits independent bids for different discount rates and payment terms. This allows the system to evaluate multiple individualized credit terms simultaneously without requiring a single complex negotiation structure, resolving the contradiction between adaptability and complexity.
Solution Approach 2:
The system implements dynamic bidding where credit terms are not fixed in advance but evolve through multiple bidding rounds. Bidders can adjust their discount rates and payment timing based on feedback from previous rounds, allowing the system to dynamically discover optimal individualized credit terms while maintaining manageable complexity through iterative refinement.
2Adaptability or versatility
If multi-party price discovery through auction is implemented, then individualized credit terms can be discovered, but information about bids must be kept confidential from other bidders
Solution Approach 1:
The system introduces an intermediary auction platform that receives, evaluates, and manages all bid information. This intermediary holds the confidential information about each bidder's preferences and constraints, allowing multi-party price discovery to occur without direct information exchange between bidders, thus preserving bid confidentiality while enabling comprehensive price discovery.
Solution Approach 2:
The system implements feedback mechanisms where bidders receive information about the range of bids received and evaluation criteria without revealing specific competitor bids. This allows bidders to adjust their strategies based on market conditions while maintaining confidentiality of individual bid submissions, resolving the contradiction between multi-party discovery and information protection.
3Productivity
If real-time bidding evaluation is performed, then liquidity is improved and payment terms can be optimized, but processing complexity and computational requirements increase
Solution Approach 1:
The system evaluates bids in partial rounds rather than requiring complete evaluation of all possible bid combinations simultaneously. By processing bids in manageable batches and using heuristic evaluation methods, the system achieves real-time payment processing efficiency without requiring exponentially complex computational resources, resolving the contradiction between productivity and system complexity.
Data Source
AI summary
A system and method for the dynamic discovery of prices through the use of an auction is provided. In one embodiment, the system allows a seller to auction homogenous assets or liabilities to a plurality of bidders. The assets or liabilities may be organized in baskets by maturity, by geographic location, by type, by a property, etc. The system may determine the eligibility for acceptance of bids submitted by the bidders and a plurality of bids may be determined to be eligible for acceptance using the same or different criteria. Further, a margin by which the bids are acceptable may be determined and a representation of the margin may be communicated to the seller or a bidder. The seller may configure an auction event with auction parameters, such as bid floors and hurdle rates and may alter event parameters while the auction is ongoing.