Abstract:
A receivables management method whereby a credit provider provides sufficient credit to a plurality of buyers who place orders with a seller to cover debts incurred only when placing the orders with the seller. The buyers placing the orders with the seller thereby incurred debt with the seller. The seller fulfills the orders and transfers the debt to the credit provider in exchange for settlement of the debts by the credit provider. The credit provider seeks settlement of the debts from the buyers. In addition, an apparatus is provided for processing data wherein data is received from a seller relating to orders made by a plurality of buyers. The data includes order information and debt information. A data processing device is provided for separating the order information from the debt information and forwarding the debt information to the debt processing device. The debt processing device processes the debt information to produce processed debt information before returning the processed debt information to the data processing device. The data processing device associates the order information with the processed debt information to produce processed data to be sent to the buyers.

Description:
FIELD OF THE INVENTION  
         [0001]    The present invention relates to a receivables management method and apparatus for processing data.  
         BACKGROUND OF THE INVENTION  
         [0002]    Funding trade debts (receivables) forms a large part of the working capital of all major companies. That is, once an order is placed with a company and a sale is recorded, although the value of the sale becomes an asset of the company, the company may need to wait a considerable period of time before they receive settlement of the debt incurred as a result of the placed order. It is thus necessary for the selling company to have capital to cover the cash which they have not received. Delays in receiving settlement of debt may cause cash flow problems for the selling company which may in turn, cause delays in settling debts they have with their own creditors.  
           [0003]    A study conducted in Australia indicated that in the period from December 1999 to November 2000, the average payment period was 68 days past the due date. Further, the University of Tennessee study undertaken in relation to B2B payments, the participating companies reported that approximately 61% of their accounts receivable were 50 days or older.  
           [0004]    Accordingly, it would be advantageous to provide an alternative receivables management method. Further, it would be desirable that any such receivables management method reduced the cost of transactions to the seller.  
           [0005]    Currently, a selling company typically has an electronic trading facility provided by their bank. This may be an EFTPOS terminal but could also be an internet banking portal. An additional transaction cost may be incurred where the buyer uses a different bank to the seller. In this case, the seller&#39;s bank will typically charge a fee (usually referred to as an interchange fee,) for carrying out the transaction. That is, the fee is charged in return for the seller&#39;s bank retrieving the money represented by the transaction from the buyer&#39;s bank. Typically, an interchange fee is charged as a percentage of the transaction (say 2%) and this interchange fee is split between the seller&#39;s bank and the buyer&#39;s bank—for example, 0.8% to the seller&#39;s bank and 1.2% to the buyer&#39;s bank. It would be desirable to reduce these fees.  
         DISCLOSURE OF THE INVENTION  
         [0006]    Accordingly, the invention provides a receivables management method comprising:  
           [0007]    (a) a credit provider providing sufficient credit to a plurality of buyers who place orders with a seller to cover debts incurred only when placing said orders with said seller;.  
           [0008]    (b) said buyers placing orders with said seller thereby incurring debts with said seller;  
           [0009]    (c) said seller fulfilling said orders;  
           [0010]    (d) said seller transferring said debts to said credit provider in exchange for settlement of said debts by said credit provider; and  
           [0011]    (e) said credit provider seeking settlement of said debts from said buyers.  
           [0012]    Preferably, settlement by said credit provider is performed automatically.  
           [0013]    Preferably, said method further comprises assessing a risk of a proportion of the debt incurred by said buyers not being settled with said credit provider, and insuring against said risk.  
           [0014]    It will be apparent that the credit provider will need to process the financial information generated by the seller as part of the transaction so that the credit provider can provide the buyer with an account. However, it would be undesirable for the credit provider to have to alter their existing systems in order to process this data, and therefore according to another aspect of the invention there is provided [insert claim 13]. 
       
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0015]    A preferred embodiment of the invention will now be described in relation to the following drawings in which:  
         [0016]    [0016]FIG. 1 is a schematic diagram illustrating the method of the present invention;  
         [0017]    [0017]FIG. 2 is a schematic diagram illustrating the arrangement of the preferred embodiment;  
         [0018]    [0018]FIG. 3 is a schematic diagram illustrating an embodiment in which the seller includes an intermediary and a plurality of ultimate sellers;  
         [0019]    [0019]FIG. 4 illustrates a further alternative where there are a plurality of credit providers; and  
         [0020]    [0020]FIG. 5 shows further detail of the scheme administrator of FIGS.  2  to  4 . 
     
    
     DESCRIPTION OF THE PREFERRED EMBODIMENTS  
       [0021]    It will be appreciated that when a company receives orders for products or services from a buyer of those products or services, a debt is incurred by the buyer with the seller. In some circumstances the seller will not supply to the buyer until they have received settlement of the debt, however, in many circumstances it is necessary for the seller to extend credit to all of its buyers in order for those buyers to conduct business with the seller. The seller will often supply the goods or services ordered by the buyer before receiving payment for those goods or services from the buyer. Thus, it is necessary for any seller to have a certain amount of working capital to carry out their business so that they can pay their own suppliers and their ongoing business costs while waiting to receive funds from buyers. This imposes a substantial cost on businesses.  
         [0022]    In the preferred embodiment, the burden of providing credit to buyers is shifted from the seller to a credit provider.  
         [0023]    In the preferred embodiment, this is achieved by the credit provider providing credit to the buyers of the seller for the specific purpose of buying from the seller. An immediate effect of doing so is to reduce transaction costs. For example, if the seller has an account with the first bank (or credit provider), it can be assumed that some of the buyers who purchase from the seller will have accounts with other banks (credit providers).  
         [0024]    It a buyer who has a different credit provider to the seller places an order with the seller and pays for that order electronically via an electronic payment facility provided by the seller&#39;s credit provider a fee will be charged to the seller on the transaction. Such fees, typically known in the industry as interchange fees, are usually about 2% of the transaction and are, charged for the purpose of covering the costs of the sellers credit provider redeeming money from the buyer&#39;s credit provider. The interchange fee is typically split between the seller&#39;s credit provider and the buyer&#39;s credit provider in the ratio of 0.8% to 1.2% or 1.0% to 1.0% depending on the nature of the transaction. In the method of the present invention because all of the participating buyers of the seller are provided with credit from the same credit provider, transaction fees are greatly reduced. However, more importantly the burden of providing credit is shifted from the seller to the credit provider.  
         [0025]    It will be appreciated that shifting the burden of providing credit also involves shifting the risk of buyers defaulting on their debts from the seller to the credit provider.  
         [0026]    This poses a number of difficulties because of the normal method of assessing credit to be provided. For example, a credit provider when providing credit to a person, normally needs to assess the risk of each person, for whom they provide credit, defaulting on their debt and also needs to assess their prospects of recovering such debts should the person default. If the level of credit being provided is substantial, the credit provider is likely to seek guarantees from the persons involved. For a seller, the proposition of all of their buyers having to undergo credit check by the credit provider is an unattractive one. A seller would be concerned that asking their clients to participate in credit checks would encourage their buyers to go elsewhere to obtain the goods or services.  
         [0027]    The inventors have realised that it is possible to address the risk of a proportion of the debt incurred by the buyers of a particular seller not being settled by insuring against the risk.  
         [0028]    Therefore, in the preferred embodiment the credit provider takes out credit insurance to cover the unsecured credit provided to the buyers of the seller. This enables a much larger amount of unsecured credit to be provided than could be provided traditionally. Further, by assessing the credit risk as a whole, credit can be provided to most buyers of a particular seller without any specific credit assessment. It is only necessary to assess individual buyers if the demands for credit are unusual. For example, if the credit demands are outside of what is to be considered to be a normal credit requirement for the sellers business. In an experimental system installed with a major supplier to pharmacists in Australia, up to AU$350,000 of credit could be extended to any individual pharmacy without any check being made of the credit liability of the pharmacy provided the application for credit by the buyer did not also exceed 2.4 times the buyer&#39;s normal monthly spend with the seller. This enabled almost all pharmacies to be provided with credit without having their credit liability assessed individually. Thus, significantly reducing cost in connection with credit assessment while not imposing unnecessary on inconvenience to the sellers buyers.  
         [0029]    It will be apparent to persons skilled in the art that the nature of the credit insurance provided and the level of insurance will depend on the nature of the seller&#39;s business and that the appropriate level of insurance can be assessed using standard actuarial procedures.  
         [0030]    Typically, the insurer would initially look at the overall industry in which he seller is involved to determine the level of risk in that industry. This can be achieved by the insurer reviewing industry reports or reviewing their own databases in order to examine the track record of other persons engaged in business within the industry.  
         [0031]    Then, the insurer would examine the seller&#39;s business, typically be reviewing their portfolio of debtors (i.e. buyers) to determine a level of bad debts etc. The insurer may investigate to determine whether these past problems are likely to continue. The insurer will then set up a number of criteria which must be met in order for credit to be provided to individual buyers. If criteria aren&#39;t met the applications for credit are reviewed individually and credit is provided or refused. If credit is refused, the seller may choose to ask the credit provider to provide credit to a buyer anyhow in exchange for a guarantee to buy back any bad debt incurred by that buyer from the credit provider.  
         [0032]    In the foregoing description, the cost of insuring the credit is borne by the credit provider but this is paid for by a management fee which is paid by the seller to the credit provider, usually, as a percentage of turnover. In an alternative embodiment, the seller may carry the burden of the credit insurance in exchange for a reduced management fee.  
         [0033]    [0033]FIG. 1 illustrates a process which occurs after credit has been provided by the credit provider to the buyers  20  of a seller  22 . FIG. 1 illustrates the process for a single buyer  20 . As indicated by arrow  1 , the buyer places an order with seller  22 . Arrow  2  indicates that the seller then fulfils the order. It will be appreciated that order fulfilment need not be synchronous with the remaining steps. That is, order fulfilment will occur in accordance with the seller&#39;s normal business practices. For example, the seller is a paint shop the supply may be made immediately, however, if the seller is a computer hardware provider, it may be necessary to assemble the relevant computer hardware before supplying the computer hardware. Details of the order of the buyer and hence the debt incurred by the buyer are entered into the seller&#39;s account system  24  as indicated by arrow. At the end of each day, the seller&#39;s system  24  batches all invoiced transactions and forward the data from seller hub  26  to the data switch  28  as indicated by arrow  4 . It will be thus appreciated that the data transferred from the sellers hub  26  includes both financial and non-financial information, herein termed debt information and order information respectively. The respective items of information are marked as relating to buyer  20 .  
         [0034]    As indicated by arrow  5 , the data switch  28  acknowledges receipt of this information to the sellers hub  26 . The data switch  28  then separates the financial (debt) and non-financial (order) information and transmits the financial information to the credit provider  30  as indicated by arrow  6  together with a unique key which identifies the buyer. The credit provider  30  analyses the financial data provided by data switch  28  and produces an exception report  7  for any non-matching account numbers which can be reprocessed by seller  22 . The credit provider  30  then automatically credits the seller&#39;s hub  26  with the total value of all debts of the previous day as indicated by arrow  8 .  
         [0035]    Each month the seller transmits a receivables management fee to the credit provider  30  as indicated by arrow  9 . This receivables management fee is split between the credit provider  30  and a scheme administrator  32 . The scheme administrator is responsible for maintaining data switch  28  as well as carrying out a number of other functions which will be described in more detail below. As indicated by arrow  10 , at the end of each month, the processed financial information is forwarded to the data switch  28 . The processed financial information includes what is essentially an account for each buyer  20  and is tagged by the buyer&#39;s individual key or account number. At the same time, data is transmitted by data switch  28  to the scheme administrator  32  as indicated by arrow  11 . This data includes the processed financial information and may also include additional demographic information. In the preferred embodiment, the scheme administrator uses the processed financial information to generate loyalty program rewards points for each of the buyers and transmits data representative of the awarded points as indicated by arrow  12  to the data switch  28 .  
         [0036]    The data switch then assembles the non-financial (order) information, the financial debt information and the rewards scheme information into a single file. Thus, this file contains all the normal monthly account such as the buyer could expect to receive from a seller with full details of all orders made from the seller during the proceeding months a summary of previous payment and some of the outstanding balance. However, this information is enhanced with the rewards scheme data and the details of how to pay the credit provider.  
         [0037]    In the preferred embodiment, files representing this data are then transferred to a statement printer  34  as indicated by arrow  13 . The statement printer then prints this data from these data files onto the appropriate stationary and they are dispatched as indicated by arrow  14  to the buyer  20 .  
         [0038]    It will be appreciated by those skilled in the art that the statements could also be transmitted electronically to the buyer  20 .  
         [0039]    The statement includes the deadline for the buyer to pay the statement. Typically credit providers use a 55 day billing cycle and hence the buyer will typically have 25 days to settle their debts with the credit provider. Thus, it will be appreciated that it is the credit provider  30  who is seeking settlement of the debts rather than the seller  22 . As illustrated by arrow  15 , the buyer  20  can either settle directly with the credit provider  30  by direct debit mechanism  30   a  as indicated by arrow  15  or can settle by attending a branch of the credit provider  30   b  as indicated by arrow  15   b.    
         [0040]    While the foregoing embodiment has been described in relation to a monthly billing cycle, it will be appreciated that the billing cycle can be varied depending on the needs of the seller and the credit provider.  
         [0041]    The use of a loyalty program is adopted in the present invention because it will be appreciated that the credit provider  30  is likely to have stricter credit enforcement than a seller  22 . Hence, providing a loyalty awards scheme offsets the fact that the buyer may have a reduced period in-which to pay their invoices.  
         [0042]    Above it is described that the loyalty program rewards points are awarded on the basis of financial transactions. However, it will be appreciated by persons skilled in the art that points may also be awarded on the basis of the purchase of particular products whereby the seller can encourage, for example, the purchase of a new product or a product where sales have dropped. In this case, some or all of the non-financial information can be forwarded to scheme administrator  32  so that this information can be used when assessing the appropriate level of reward points to be awarded.  
         [0043]    FIGS.  2  to  4  illustrate various possible configurations in which the preferred embodiment can be employed. For the sake of simplicity, in these diagrams the data switch  28  and the scheme administrator  32  and the statement printer  34  are shown collectively as scheme administrator  32 .  
         [0044]    [0044]FIG. 2 reflects the situation of FIG. 1 where a plurality of buyers  20   a  to  20   n  place orders and receive fulfilment of the orders as indicated by arrow  42  from a seller  22 . The seller communicates all transaction data including debt and order information to a scheme administrator  32  as indicated by arrow  44 . Financial information is passed between the scheme administrator  32  and a credit provider  30  as indicated by arrow  46 . Account information is passed by the scheme administrator to buyers  20   a  to  20   n  as indicated by arrow  50 .  
         [0045]    [0045]FIG. 3 illustrates an alternative arrangement wherein there are a plurality of sellers  22 ,  22   a  to  22   n . In this embodiment, orders are placed with the ultimate seller through intermediary  23  as indicated by arrows  43  and  42   a , while order fulfilment occurs directly from ultimate sellers  22   a  to  22   n  to buyer  20  as indicated by arrow  42   b . Each of the sellers have credit provided by the same credit provider to their buyers. Thus, it will be appreciated that intermediary  23  could represent a B2B hub. Each buyer does not necessarily have credit provided for the purpose of purchasing goods or services from each seller, or may have reached their credit limit for an individual seller, hence the B2B hub preferably has access to the credit information for each buyer so that when the buyer makes an offer to purchase goods and services, and the sellers make offers to fulfil that offer, the B2B hub  23  will only complete transactions where the buyer currently has credit to purchase from the seller.  
         [0046]    Hence, the buyer may not get the cheapest price if they, for example only have sufficient credit with the most expensive seller  22 . In all other respects, the system operates as indicated above but it will be appreciated that transaction data is passed from intermediary  23  to scheme administrator  32  as indicated by arrow  44 . It will be appreciated that the arrangement of FIG. 3 can be varied so that while orders are placed through intermediary  23 , the transaction data is generated by respective sellers  22  and passed to the scheme administrator  32 . It will be appreciated that the buyer may be provided with an overall amount of credit by a single credit provider but that credit will be limited in its application—i.e. only a proportion of the overall credit will be useable with an individual seller.  
         [0047]    It will be further appreciated that settlement from the credit provider  30  can either occur through the intermediary  23  or directly to respective sellers  22 .  
         [0048]    [0048]FIG. 4 illustrates a more complicated environment in which there are a plurality of credit providers  56   a ,  56   b  and  56   c . In this embodiment, while buyers  50  place orders through an intermediary  54 , in the form of B2B portal, the buyers  50  and sellers  52  are grouped by particular credit providers. For example, seller group  52   a  receives orders from buyer group  50   a  who use credit provided by credit provider  56   a . In other respects, the system operates as described above. However, it will be appreciated that an individual buyer could have credit provided by more than two credit providers but in each case, the credit is provided solely for purchase with a particular seller.  
         [0049]    [0049]FIG. 5, shows a detailed view of the credit provider  32  of FIGS.  2  to  4 . The credit provider consists of an application layer which provides an interface with the other elements of the system. A payment and billing gateway, receives all data from the seller  22  and transmits the financial data to the credit provider  30 . The payment and billing gateway  62  can also act as a gateway for payments between the seller and the credit and the credit provider as well as between the buyers and the credit provider.  
         [0050]    Loyalty program  64  communicates with payment and billing module to generate relevant reward points and is in itself in communication with the reward fulfilment section which allows buyers to redeem their points.  
         [0051]    The system administrator also includes a debtor risk management interface for dealing with the insurer.  
         [0052]    It will be appreciated that as part of the foregoing described invention, it has been necessary to develop apparatus for processing data. Most credit providers operate on so called legacy systems which while capable of processing financial data are not configured to handle non financial data. Therefore, in the preferred embodiment the data switch  28  of FIG. 1 is used as a data processing means to separate the order information from the debt information and forward the debt information to the debt processing means of the credit provider. The data processing means is further configured to reassemble the order information with the process debt information in order to produce processed data to be sent to the buyers. Further, in the preferred embodiment, the data processing means also associates the additional information (such as rewards scheme information) generated from at least one of the debt information and the order information with the processed data forwarded to the buyer. Thus, the credit provider does not need to overly adapt their existing systems in order to operate the foregoing scheme.  
         [0053]    It will be apparent to persons skilled in the art that various modifications may be made to the present invention and that the scope of the invention is to be determined solely from the scope of the following claims.