Abstract:
Methods and systems for executing and financing transactions of goods and commodities as an insulated parent company are described. The method includes the steps of incorporating wholly owned subsidiary companies to handle trading and financing issues, approving sellers to participate according to a seller participation agreement, approving buyers to participate according to a buyer participation agreement, and securing capital to facilitate financing through a financing subsidiary.

Description:
CROSS REFERENCE TO RELATED APPLICATIONS  
       [0001]    This application claims the benefit of U.S. Provisional Application No. 60/178,090, filed Jan. 26, 2000, which is hereby incorporated by reference in its entirety. 
     
    
     
       BACKGROUND OF THE INVENTION  
         [0002]    This invention relates generally to methods of doing business and more specifically to insulating a parent company acting as a medium through which buyers and sellers transact business from the disputes or claims of buyers and sellers through the incorporation of subsidiaries.  
           [0003]    The increase of business conducted over the internet has caused an increase in business opportunities for both entrepreneurs and established corporations alike, in what has become known as E-commerce. A portion of the internet activity is the buying, selling and auctioning of commodities or other goods through companies, referred to as “dot corn” companies. “Dot com” companies are available to a potential customer twenty four hours a day, seven days a week, from anywhere in the world.  
           [0004]    Unfortunately, the entrepreneur who sees an opportunity in a market niche for E-commerce, may not be an expert in that particular business where he or she perceives the niche, and may be exposing themselves to liability claims or other causes of action. It would be desirable to enable a “dot com” company to facilitate the buying and selling of goods without incurring the liability risk associated with known methods of buying and selling of goods.  
         BRIEF SUMMARY OF THE INVENTION  
         [0005]    A business model including a method for executing and financing transactions of goods and commodities as a parent company is described. The method of implementing the business model includes the steps of incorporating wholly owned subsidiary companies to handle trading and financing issues, approving sellers to participate according to a seller participation agreement, approving buyers to of implementing the business model includes the steps of incorporating wholly owned subsidiary companies to handle trading and financing issues, approving sellers to participate according to a seller participation agreement, approving buyers to participate according to a buyer participation agreement and securing capital to facilitate financing through a financing subsidiary. 
       
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0006]    [0006]FIG. 1 is a system block diagram; and  
         [0007]    [0007]FIG. 2 is a chart of a business model showing transactions and paths of the transactions according to the present invention. 
     
    
     DETAILED DESCRIPTION OF THE INVENTION  
       [0008]    [0008]FIG. 1 illustrates an exemplary system  10  in accordance with one embodiment of the present invention. System  10  includes a computer configured as a server  12  and a plurality of other computers  14  coupled to server  12  to form a network. The network of computers may be local area networks (LAN) or wide area networks (WAN).  
         [0009]    Server  12  is configured to aid in implementing a business model, described below, and includes web pages through which buyers and sellers of goods or commodities can access to buy, sell or bid on those goods and commodities. The web pages stored in server computer  12  can be accessed by a requester at any one of computers  14 . In one embodiment, server  12  is coupled to computers  14  via a WAN or LAN. A user may dial-in or directly login to an Intranet or the Internet to gain access to server  12 . Each computer  14  includes an interface for communicating with server  12 . The interface allows a user to input data relating to the buying and selling of goods and commodities which are uploaded to server  12 .  
         [0010]    [0010]FIG. 2 is a chart  20  of a business model showing transactions and paths of the transactions according to the present invention. Chart  20  includes a parent company  22  and two wholly owned subsidiaries, finance subsidiary  24  and trading subsidiary  26 . According to the business model, finance subsidiary  24  buys 28 receivables from trading subsidiary  26  and trading subsidiary  26  sells 30 receivables to finance subsidiary  24 . The business model shown in FIG. 2 includes a capital company  32  which supplies capital to the business venture, a buyer  34  of the receivables and a seller  36  of the receivables.  
         [0011]    As shown in FIG. 2 capital company  32  makes 38 secured loans to finance subsidiary  24  to fund receivables purchases from trading subsidiary  26 . In return, finance subsidiary  24  pledges 40 purchased accounts to capital company  32  to secure the loan. Both trading subsidiary  26  and capital company  32  have to approve  42  buyer  34  for participation in the business model and also establish terms of participation followed by buyer  34 . One established term is that buyer  34  agrees  44  to purchase from trading subsidiary  26  on standard terms and only holds seller  36  responsible for performance issues.  
         [0012]    As to seller  36 , trading subsidiary  26  agrees  46  to pay seller  36  according to standard terms for sale to approved buyer  34 . In addition seller  36  assigns  48  all rights to the goods to trading subsidiary  26  and forwards all shipping and insurance documents to trading subsidiary  26 . Buyer  34  places 50 orders, subject to terms and conditions. Seller  36  agrees  52  with trading subsidiary  26  to ship to buyer  34  for trading subsidiary&#39;s account, subject to agreed upon terms and conditions.  
         [0013]    As described in FIG. 2, the method for executing and financing transactions of commodities as a parent company is accomplished by incorporating wholly owned subsidiary companies, such as financing company  24  and trading subsidiary  26 . Financing company  24  is bankruptcy remote and is configured to buy 100 percent of the receivables from trading company  26  on a true sale basis with proceeds of secured revolving credit from capital company  32 . Capital company  32  agrees to make loans to finance company  24  based on a borrowing base determined from the eligible purchased receivables previously sold to finance company  24  by trading company  26 . The capital company loans are guaranteed by parent company  22 . In addition, approval of seller participation according to a seller participation agreement and approval of buyer participation according to a buyer participation agreement facilitate implementation of the business model. Approval of buyers and sellers may be effected individually, through standardized scoring models, or through computer assisted or automated scoring and authentication routines.  
         [0014]    Examples of seller participation agreements include, but are not limited to clauses such as, agreeing to sell goods to the trading subsidiary on the terms and conditions agreed, and agreeing to look only to the trading subsidiary for payment on terms agreed to with the trading subsidiary, the terms varying on the creditworthiness of the seller as determined by the parent company and a supplier of capital. Other clauses typically in seller participation agreements include agreeing to assign all of the rights in a shipment to the trading subsidiary, agreeing that the buyer has a right to enforce any claims for non-conformity of shipment and non-performance, agreeing to resolve any disputes with a buyer in accordance with a dispute resolution mechanism selected by the parent company, and agreeing to grant the trading subsidiary a security interest in seller&#39;s right to receive payment in order to secure seller&#39;s obligations under the participation agreement, whether the obligations are owed to either or both of the buyer or the trading subsidiary. Acceptance and implementation of standard terms may be by ancillary agreements or acceptance of an offer on standard terms by use of the computerized market through which the buyer/seller transaction is effected. Still other clauses typically in seller participation agreements include agreeing to assign the trading subsidiary receivables and rights to the financing subsidiary and the supplier of capital, agreeing to indemnify the trading subsidiary for all losses of whatever kind resulting from seller non-performance, and agreeing to waive any set-off rights the seller may have against the buyer or the trading subsidiary as applicable to any receivable held by the financing subsidiary.  
         [0015]    Examples of buyer participation agreements include, but are not limited to clauses such as agreeing to pay 100 percent of the purchase price to the trading subsidiary for orders within an agreed time period by a method and at a place previously agreed to, agreeing to pay ancillary charges such as shipping, handling, insurance and taxes and agreeing to be subject to suspension for a specified period in the event of a dispute as to conformity of goods shipped, subject to obligation to pay at the end of the suspension period with interest if the dispute is not resolved in the buyer&#39;s favor. Other clauses typically in buyer participation agreements include agreement on timing of transfer of title and risk of loss, agreeing only to hold seller responsible for performance or conformity of goods, agreeing to provide security for the buyer&#39;s obligations, if deemed appropriate for approving buyer participation, agreeing to indemnify the trading subsidiary for all losses of any kind resulting from buyer non-performance, agreeing to waive any set-off rights the buyer may have against the seller or the trading subsidiary as applicable to any receivable held by the financing subsidiary, and agreeing to the assignment of the trading subsidiary receivables and rights to the financing subsidiary and a supplier of capital.  
         [0016]    As described above, the business model encourages the development of E-commerce by developing a business structure whereby a parent company can insulate assets by separating company control and economic interests. While the invention has been described in terms of various specific embodiments, those skilled in the art will recognize that the invention can be practiced with modification within the spirit and scope of the claims.