Blockchain-Enabled Factoring for the Digital Age

Factoring agents faced significant risks when providing financial assistance to manufacturers. The challenges were multifaceted and potentially devastating:

• Dead Stock Risk: Traditional factoring methods often left agents exposed to potential losses if manufacturers produced goods that couldn’t be sold, resulting in dead stock.
• Fraud Risk: There were instances where unscrupulous manufacturers would take the money provided by factoring agents and disappear, leaving the agents with substantial financial losses.
• Bankruptcy Risk: If a manufacturer went bankrupt, factoring agents often found themselves as unsecured creditors, with little hope of recovering their investments.
• Lack of Control: Agents had limited visibility into how their funds were being used once released to the manufacturer, making it difficult to prevent misuse or mismanagement.
• Market Volatility: Rapid changes in market demand could leave manufacturers with unsold inventory, impacting their ability to repay factoring agents.