In an effort to offset the financial squeeze felt by many companies, B2B spend management provider Ariba Inc. has forged a partnership with The Receivables Exchange, which bills itself as the first online auction marketplace for real-time trading of accounts receivables.
The Receivables Exchange, which launched its online auction platform just three weeks ago, caters to small and medium-sized businesses that have a large percentage of their working capital tied up in outstanding invoices and need cash to continue to grow their businesses.
The exchange works on the premise that investors will buy a manufacturer’s or supplier’s accounts receivable. For example, once a supplier sells an order of goods, it generates an invoice whose payment terms may be 60 days out, leaving that supplier to wait for two months or more for the money. The Receivables Exchange allows a supplier to immediately auction off that accounts receivable, generally to hedge fund and institutional investors.
Companies that use the Ariba Supplier Network to exchange order and payment information now have access to this add-on service. When a buyer’s ERP system generates an electronic accounts receivable statement and sends it through the network to the supplier, the supplier can now securely flow that approved receivable directly into the Receivables Exchange.