Private Credit & Revenue-Based Financing

Invoice & Receivable Investing

Investing in receivables or invoice-factoring.

Investment Overview

Invoice and receivable investing (factoring) involves purchasing corporate invoices at 2-10% discounts, providing immediate cash to businesses while investors earn 8-15% annualized returns when invoices paid 30-90 days later. Leading platforms: Fundbox ($1B+ facilitated, SME focus), C2FO (Fortune 500 supply chains, $150B+ processed), Resolve Pay (B2B trade credit). Market size: $3T global invoice financing market. Investment thesis: Businesses need working capital but banks require extensive documentation; invoice financing fills gap. Risk mitigation: Investment-grade corporate buyers (Walmart, Amazon) provide credit backing; default risk transferred from seller to buyer.

Market Context & Trends

Invoice financing mainstream adoption 2020-2024 as supply chain disruptions increased working capital needs. C2FO processes $150B+ annually, connecting Fortune 500 buyers with SME suppliers. Early payment discounts average 2-5% for 30-60 day acceleration (12-30% annualized). However, retailer bankruptcies (Bed Bath & Beyond, Party City) caused 100% losses for invoice investors despite "investment-grade" buyers. Key development: Blockchain-based invoice tokenization (Centrifuge, Goldfinch) bringing transparency and fractional ownership ($1K minimums vs. $100K+ traditional factoring).

How to Invest in Invoice & Receivable Investing

C2FO: Fortune 500 supply chain platform, earn 2-5% early payment discounts (12-30% annualized)

Fundbox: SME invoice financing, 8-12% investor yields, $1B+ facilitated, accredited investors

Resolve Pay: B2B trade credit, invoice financing for mid-market companies, institutional investors

Centrifuge: Tokenized invoice pools, 6-10% yields, $1K-$10K minimums, blockchain transparency

Bluevine (Platform): SME invoice factoring, no direct investor access but comparable economics example

Key Platforms & Access Points

C2FO: Fortune 500 supply chains, $150B+ processed annually, 2-5% early payment discounts

Fundbox: SME focus, $10M-$100M annual revenues, invoice + line of credit products, $1B+ volume

Resolve Pay: Mid-market B2B, net terms financing, integrate with QuickBooks/NetSuite

Centrifuge: Blockchain-based tokenized invoices, transparent pools, fractional ownership $1K+

TrueBridge Capital: Invoice fund, $50M+ AUM, institutional investors, 8-12% target net returns

Key Investment Metrics

Buyer credit quality: Investment-grade (AAA-BBB) buyers preferred; avoid junk-rated or unrated

Invoice verification: Authentic invoices with proof of delivery; fraud common without verification

Discount rate: 2-5% for 30-60 days = 12-30% annualized; higher = reflects higher default risk

Recourse vs. non-recourse: Non-recourse = investor absorbs buyer default; recourse = seller guarantees

Payment terms: 30-90 day invoices typical; >120 days increases non-payment risk significantly

Risk Considerations

Understanding these risks is critical before investing in invoice & receivable investing.

Buyer bankruptcy: Even investment-grade buyers fail (Bed Bath & Beyond 2023); invoice investors lost 100%
Invoice fraud: Fake invoices, double-pledging (same invoice sold to multiple investors) common without verification
Seller bankruptcy: If recourse structure, seller failure means investor must pursue buyer directly (legal costs)
Economic downturn: 2020 saw payment delays spike 200-300%; 30-day terms stretched to 90-120 days
Concentration: Single buyer >20% of portfolio = binary risk; diversify across 10-20 buyers minimum

Related Investment Opportunities in Private Credit & Revenue-Based Financing

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