Innovative financing method and system therefor

• US 20020038277A1
• Filed: 07/30/2001
• Published: 03/28/2002
• Est. Priority Date: 02/22/2000
• Status: Abandoned Application

• Current Assignee: ASAP Show, Inc. (China Yili Petroleum Co.)
• Original Assignee: ASAP Show, Inc. (China Yili Petroleum Co.)
• Inventors: Yuan, Frank S.
• Application Number:
  US09/918,334
• Publication Number:
  US 20020038277A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

An auction with methods and mechanisms to avoid fraud are described. One fraud avoidance aspect involves the use of a financial institution, such as a factoring entity. The financial institution guarantees at least a partial payment of the amount owed by the winning buyer to the seller in case the winning buyer does not pay. Another fraud avoidance aspect provides the winning buyer with a period of time to inspect the goods or services purchased at the auction before having to pay for them.

An innovative financing method for sales transactions between sellers and buyers to eliminate the use of a letter of credit is described. The financing method involves an agreement between a coordinator, a bank and a factor whereby the buyer'"'"'s payment obligation is guaranteed by the factor. Based on this guarantee, the bank may advance or loan a portion of the payment price to the seller before the buyer actually pays. This provides certainty in the seller'"'"'s cash flow needs.

Claims

1. A system for providing a sales transaction of goods or services between a buyer and a seller, the system comprising:

a coordinator

that receives a first purchase order from the buyer,

that issues a second purchase order to the seller based on the first purchase order,

that receives an invoice from the seller based on the second purchase order, and

that assumes title in the invoice;

a financial institution

that receives an interest in the invoice from the coordinator, and

that guarantees the buyer'"'"'s payment; and

a bank that advances or loans at least a portion of the invoice to the seller based on the guarantee from the financial institution.

2. The system of claim 1 wherein the first purchase order includes a mark-up representing the coordinator'"'"'s fee for providing the sales transaction.

3. The system of claim 2 wherein the mark-up is agreed upon between the coordinator and the buyer prior to the transaction.

4. The system of claim 1 wherein the coordinator issues a coordinator'"'"'s invoice to the buyer indicating that the buyer is to pay the financial institution.

5. The system of claim 1 wherein the financial institution is located in the same country as the coordinator, and the bank is located in the same country as the seller.

6. The system of claim 1 wherein the financial institution investigates the buyer'"'"'s credit and notifies the coordinator of whether the buyer'"'"'s credit is approved to participate in the system and of any limitations on the buyer'"'"'s credit.

7. The system of claim 1 wherein the coordinator assigns the invoice to the financial institution.

8. The system of claim 7 wherein the financial institution perfects its legal position in the assigned invoice with respect to the coordinator.

9. The system of claim 1 wherein the second purchase order indicates that the coordinator is to be billed for the transaction and that the goods or services are to be shipped to the buyer.

10. The system of claim 1, further comprising a set of shipping documents prepared by the seller that indicate the seller to be the importer of record, that are presented to the custom'"'"'s office of the buyer'"'"'s country, and that are presented to the bank.

11. The system of claim 10 wherein the bank provides the advance or loan to the seller upon receipt of the shipping documents, the advance or loan being a percentage of the invoice from the seller to the coordinator.

12. The system of claim 11 wherein the percentage is agreed upon between the bank and the seller prior to the transaction.

13. The system of claim 1, further comprising a time period during which the buyer inspects the goods or services received from the seller.

14. The system of claim 13 wherein the buyer finds no discrepancy between the goods or services ordered and the goods or services actually received.

15. The system of claim 14 wherein the buyer pays the financial institution, the financial institution pays the mark-up to the coordinator, the financial institution pays the bank less any applicable charges of the financial institution, and the bank pays the seller less the amount of the advance or loan and any applicable charges of the bank.

16. The system of claim 13 wherein the buyer finds a discrepancy between the goods or services ordered and the goods or services actually received.

17. The system of claim 16 wherein the buyer and seller negotiate amended terms of the transaction to accommodate the discrepancy.

18. The system of claim 17 wherein the buyer pays a portion of the amount due to the financial institution, the financial institution pays the coordinator a portion of the mark-up, the financial institution pays the bank a portion of the invoice amount less any applicable charges of the financial institution, and the bank pays the seller a reduced amount less the amount or loan of the advance and any applicable charges of the bank.

19. The system of claim 1 wherein the goods or services are not accepted by the buyer and the seller pays back the advance or loan to the bank plus any applicable charges of the bank.

20. The system of claim 1, wherein the first purchase order and second purchase order are transmitted electronically.

21. A method for a coordinator to provide a sales transaction of goods or services between a buyer and a seller, the method comprising:

transmitting a first purchase order from the buyer to the coordinator;

transmitting a second purchase order from the coordinator to the seller based on the first purchase order;

transmitting an invoice from the seller to the coordinator based on the second purchase order, wherein the coordinator assumes title in the invoice;

assigning an interest in the invoice by the coordinator to a financial institution;

guaranteeing payment of the invoice by the financial institution to a bank; and

advancing or loaning at least a portion of the invoice by the bank to the seller based on the guarantee from the financial institution.

22. The method of claim 21, further comprising including a mark-up in the first purchase order representing the coordinator'"'"'s fee for providing the sales transaction.

23. The method of claim 22 wherein the mark-up is agreed upon between the coordinator and the buyer prior to the transaction.

24. The method of claim 21 wherein the coordinator issues a coordinator'"'"'s invoice to the buyer indicating that the buyer is to pay the financial institution.

25. The method of claim 21 wherein the financial institution is located in the same country as the buyer, and the bank is located in the same country as the seller.

26. The method of claim 21, further comprising the financial institution investigating the buyer'"'"'s credit and notifying the coordinator of whether the buyer'"'"'s credit is approved to participate in the method and of any limitations on the buyer'"'"'s credit.

27. The method of claim 21, further comprising the coordinator assigning the invoice to the financial institution.

28. The method of claim 27, further comprising the financial institution perfecting its legal position in the assigned invoice with respect to the coordinator.

29. The method of claim 21 wherein the second purchase order indicates that the coordinator is to be billed for the transaction and that the goods or services are to be shipped to the buyer.

30. The method of claim 21, further comprising

the seller preparing a set of shipping documents that indicate the seller to be the importer of record;

presenting the shipping documents to the custom'"'"'s office of the buyer'"'"'s country; and

presenting the shipping documents to the bank.

31. The method of claim 30, further comprising the bank providing the advance or loan to the seller upon receipt of the shipping documents, the advance or loan being a percentage of the invoice from the seller to the coordinator.

32. The method of claim 31 wherein the percentage is agreed upon between the bank and the seller prior to the transaction.

33. The method of claim 21, further comprising providing a time period for the buyer to inspect the goods or services received from the seller.

34. The method of claim 33 wherein the buyer finds no discrepancy between the goods or services ordered and the goods or services actually received.

35. The method of claim 34, further comprising:

the buyer paying the financial institution;

the financial institution paying the mark-up to the coordinator;

the financial institution paying the bank less any applicable charges of the financial institution; and

the bank paying the seller less the amount of the advance or loan and any applicable charges of the bank.

36. The method of claim 33 wherein the buyer finds a discrepancy between the goods or services ordered and the goods or services actually received.

37. The method of claim 36 wherein the buyer and seller negotiate amended terms of the transaction to accommodate the discrepancy.

38. The method of claim 37, further comprising:

the buyer paying a portion of the amount due to the financial institution;

the financial institution paying the coordinator a portion of the markup;

the financial institution paying the bank a reduced amount less any applicable charges of the financial institution; and

the bank paying the seller a reduced amount less the amount of the advance or loan and any applicable charges of the bank.

39. The method of claim 21 wherein the goods or services are not accepted by the buyer and the seller pays back the advance or loan to the bank plus any applicable charges of the bank.

40. The method of claim 21, wherein the first purchase order and second purchase order are transmitted electronically.