CONTEXT: DOUBLE FINANCING RISK

The data from each factoring company is proprietary, and sensitive.

A typical type of fraud in factoring is called double financing: financing the same receivable multiple times with several factors.

Solving this risk is thus a major stake for the industry. And this means safely mutualising data on a technologically distributed architecture.

The technology allowing such a thing is blockchain, enabling to solve it in an elegant and cost-effective manner.

With its leadership position in the market, and as a trusted partner of the most innovative factoring companies worldwide, Euler Hermes has invested in researching this field: DoFiChain is an EHDA project developing a blockchain-based service removing the risk of double financing for factors.

OUR VISION: A BLOCKCHAIN FOR TRADE RECEIVABLES REMOVING THE DOUBLE FINANCING RISK

DoFiChain is a pilot led by EHDA and the first step in the development of a blockchain for trade receivables removing the double financing risk. This collaborative service operated by Euler Hermes for all factors flags receivables at risk of double financing. Beyond the development of the solution, Euler Hermes will also develop the market awareness in the factoring world, to ensure optimal reach and representativeness.

Technically, this service relies on a distributed repository of signatures of the invoices financed by the different factoring companies. It sends real-time push notifications in case of double mobilization suspicion in order to enable prompt resolution between the relevant factoring companies.

DoFiChain is also supported by Artificial Intelligence in order to detect sophisticated double financing schemes, where the receivable signatures would slightly differ.

With its distributed architecture, the service is cost-efficient to operate, and ensures strong data privacy protection to its members (in particular, no information about cost of financing is shared).

HOW TO PARTICIPATE

The pilot is ready to start. Learnings will be shared in the second half of 2017. If you are interested in joining the project, get in touch now - we are happy to discuss various types of contributions. 

HOW ARE WE CRACKING THE PROBLEM?

We are not set in our technology stack, but here is what we know so far:

We will need a way to manage different access rights for the partners

We want to use a blockchain to make it easy for factors to access invoices information - or invoices’ unique identifiers -  and to have a common trustable source of data

The technologies we will select need to last for some time, so we have to limit ourself to open-source technologies or technologies backed-up by big corporation and/or community

We want to use technologies that are easy to use and will integrate in already existing systems

PARTICIPATING FACTORS

Costs: there will be a participation to the running costs.

Technology: DoFiChain is lightweight for factoring companies. Thanks to the underlying Blockchain technology it is really easy to install and set up. Participants just need to install a node and then can query the node as they would with any other API.

SHARED INTERESTS

Code openness: full codebase will be open for audit and penetration testing.

 

SIMILAR INITIATIVES

Innopay ran a similar pilot in 2016 in the Netherlands: link.

EHDA has built an Ethereum-based late payment alerts net in the summer 2016.