Dynamic Payment System for Variable Cash Flow Repayment

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Solution Overview

Problem

Traditional loan repayment systems are inflexible and cannot adapt to the varying cash flows of businesses or individuals, leading to potential defaults due to fixed repayment schedules that do not align with seasonal or inconsistent income patterns.

Innovation Solution

A dynamic payment system that calculates a fixed collection rate based on a customer's monthly profits, allowing for variable repayments that increase in better months and decrease in slower months, while maintaining a predetermined loan fee, and operates in an open network to access multiple financial institutions for holistic cash flow analysis.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If a fixed repayment schedule is used, then the loan fee can be collected predictably, but the repayment becomes unmanageable during seasonal slow periods or periods of low cash flow

Engineering Contradiction:

Improvepredictability of loan fee collectionVSAvoidmanageability of repayment during low cash flow periods

Core Design Contradiction:

ReliabilityVSEase of operation

Solution Approach 1:

The patent implements dynamic repayment scheduling where the repayment amount varies based on the borrower's actual cash flow conditions. The system adjusts repayment amounts in real-time according to cash flow data from multiple financial institutions, allowing higher repayments during profitable periods and lower or deferred repayments during slow periods, while still collecting the total predetermined loan fee over time.

Inventive Principle:

Principle #15Dynamics

Solution Approach 2:

The system changes the repayment parameter (amount) based on cash flow conditions. Instead of a fixed repayment amount, the system dynamically adjusts the repayment parameter according to real-time cash flow data, enabling the borrower to make manageable payments during slow periods while ensuring the lender collects the full loan fee over the loan term.

Inventive Principle:

Principle #35Parameter changes

2Device complexity

If a closed network system is used, then the payment processing is simple, but the system cannot access real-time cash flow data from external financial institutions

Engineering Contradiction:

Improvesimplicity of payment processing systemVSAvoidaccess to real-time cash flow data

Core Design Contradiction:

Device complexityVSLoss of information

Solution Approach 1:

The patent creates a universal payment processing system that can access and process cash flow data from multiple different financial institutions (banks, credit unions, online banks) through standardized interfaces. The system aggregates cash flow data from various sources and uses this comprehensive information to determine dynamic repayment amounts, making the system adaptable to different financial institutions while maintaining centralized control.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Solution Approach 2:

The system acts as an intermediary between the borrower's multiple financial institutions and the lending platform. It connects to external financial institutions through secure data feeds, retrieves cash flow information, processes this data through the repayment algorithm, and executes payments without requiring direct integration between the lending platform and each financial institution.

Inventive Principle:

Principle #24Intermediary (Mediator)

3Measurement precision

If fixed monthly payments are required, then the loan term can be calculated precisely, but the constant repayment schedule may cause default during periods of inconsistent income

Engineering Contradiction:

Improveprecision of loan term calculationVSAvoidrisk of default during income fluctuations

Core Design Contradiction:

Measurement precisionVSReliability

Solution Approach 1:

The system implements continuous feedback by monitoring the borrower's actual cash flow from connected financial accounts and using this information to adjust repayment amounts dynamically. The system receives feedback on income patterns, seasonal variations, and cash flow timing, then adapts the repayment schedule accordingly, ensuring payments remain affordable while still progressing toward full repayment within the loan term.

Inventive Principle:

Principle #23Feedback

Solution Approach 2:

The system performs preliminary analysis of the borrower's cash flow patterns before finalizing the dynamic repayment schedule. It examines historical cash flow data, identifies seasonal patterns, and predicts future cash flow based on this analysis, allowing the system to pre-position repayment amounts that align with expected cash availability, thereby preventing default before it occurs.

Inventive Principle:

Principle #10Preliminary action

Data Source

PatentUS20240362708A1System, method, and computer readable storage medium to determine and accept dynamic payments in an open network

Publication Date: 2024.10.31 AMERICAN EXPRESS KABBAGE INC

AI summary

Disclosed are various embodiments for determining and accepting dynamic payments in an open network. Various embodiments can retrieve financial transaction historical data of a user from a plurality of accounts and calculate a collection rate by dividing a historical net profit by an expected repayment amount. Various embodiments can then issue a loan from a provider to the user. The loan can include a repayment schedule that utilizes the collection rate applied to a net profit for each of the plurality of accounts during a repayment period. Various embodiments can then retrieve financial transaction data for the repayment period of the repayment schedule. Various embodiments can then transfer a portion of the net profit for each of the plurality of accounts to an account of the provider.