System and method of transaction settlement using trade credit

• US 7,340,433 B1
• Filed: 07/27/2000
• Issued: 03/04/2008
• Est. Priority Date: 07/30/1999
• Status: Expired due to Fees

• Current Assignee: Orbian Management Ltd. (Orbian Corp.)
• Original Assignee: Orbian Management Ltd. (Orbian Corp.)
• Inventors: Stone, David, Kay, Alan, Hatfield, Roy
• Primary Examiner(s): Hamilton; Lalita M.
• Application Number:
  US09/626,838
• Time in Patent Office: 2,777 Days
• Field of Search: 705/35, 705/37, 705/39, 705/65, 705/66, 705/69, 705/76, 705/26, 705/38
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method and system for settling a transaction with trade credit value which makes use of computer hardware and software, allows Members of a trade credit settlement system to transfer electronic instruments, called trade credits, in exchange for goods and services. These trade credits are effectively electronic bills of exchange that are divisible, transferable, discountable, continuously available and have been credit-enhanced to A1/P1 status. Sponsors facilitate the system by registering buyers and suppliers as Members in the system and offering them operational accounts and drawdown accounts with authorized lines of credit. A Member-buyer approves the purchase invoice of a Member-supplier and authorizes the Sponsor to transfer trade credit value from the Member-buyer'"'"'s operational and/or drawdown account into the operational account of the Member-supplier. The trade credit value received by the Member-supplier can be held in the Member-supplier'"'"'s operational account until it matures, or discount it to cash before it matures, or transfer it to other Members for the purchase of goods or services.

Claims

1. A method of settling a transaction using trade credit value, comprising:

storing trade credit value for a first user that is a divisible, continuously available, transferable, discountable, and credit enhanced to investment grade status promissory obligation;

receiving a request from the first user to transfer a pre-determined amount of the stored trade credit value to a second user in settlement of the transaction;

confirming an availability of the requested amount of trade credit value stored for the first user for settlement of the transaction;

transferring the requested amount of trade credit value from the first user to the second user; and

allowing the transferred amount of trade credit value to be used by the second user in any of settlement of another transaction for the second user, discounting for cash before a pre-defined maturity of the trade credit value, and holding through to the pre-defined maturity of the trade credit value.

2. The method of claim 1, wherein storing the trade credit value further comprises storing the trade credit value in an operational account of the first user.

3. The method of claim 2, wherein storing the trade credit value in the operational account of the first user further comprises establishing the operational account for the first user in a trade credit settlement system.

4. The method of claim 3, wherein establishing the operational account for the first user further comprises allowing the first user to register for membership in the trade credit settlement system.

5. The method of claim 4, wherein allowing the first user to register for membership in the trade credit settlement system further comprises receiving an approval of a sponsor-member of the trade credit settlement system for the first user'"'"'s registration for membership.

6. The method of claim 5, wherein receiving the approval for the first user'"'"'s registration for membership further comprises allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system.

7. The method of claim 6, wherein allowing the sponsor-member to register for sponsor-membership further comprises recognizing the sponsor-member as a valid trading entity by the trade credit settlement system.

8. The method of claim 1, wherein storing the trade credit value further comprises storing the trade credit value in the form of a trade credit.

9. The method of claim 8, wherein storing trade credit value in the form of the trade credit further comprises storing the trade credit as an electronic promissory obligation.

10. The method of claim 1, wherein receiving the request further comprises receiving the request to transfer the pre-determined amount of the trade credit value from at least one of an operational account and a drawdown account of the first user to an operational account of the second user.

11. The method of claim 10, wherein receiving the request to transfer the pre-determined amount of the trade credit value from the operational account of the first user further comprises establishing the operational account for the first user in a trade credit settlement system.

12. The method of claim 11, wherein establishing the operational account for the first user further comprises allowing the first user to register for membership in the trade credit settlement system.

13. The method of claim 12, wherein allowing the first user to register for membership further comprises receiving an approval of a sponsor-member of the trade credit settlement system for the first user'"'"'s registration for membership.

14. The method of claim 13, wherein receiving the approval for the first user'"'"'s registration for membership further comprises allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system.

15. The method of claim 14, wherein allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system further comprises recognizing the sponsor-member as a valid trading entity by the trade credit settlement system.

16. The method of claim 10, wherein receiving the request to transfer the pre-determined amount of the trade credit value from the drawdown account of the first user further comprises establishing the drawdown account for the first user.

17. The method of claim 16, wherein establishing the drawdown account for the first user further comprises allowing the first user to register for membership in a trade credit settlement system.

18. The method of claim 17, wherein establishing the drawdown account for the first user further comprises receiving an approval of a sponsor-member of the trade credit settlement system of a request by the first user for the drawdown account.

19. The method of claim 1, wherein confirming the availability further comprises confirming the availability of the requested amount of trade credit value in at least one of an operational account and a drawdown account of the first user.

20. The method of claim 19, wherein confirming the availability of the requested amount of trade credit value in the operational account further comprises establishing the operational account for the first user in a trade credit settlement system.

21. The method of claim 20, wherein establishing the operational account for the first user further comprises allowing the first user to register for membership in the trade credit settlement system.

22. The method of claim 19, wherein confirming the availability further comprises confirming the availability of the requested amount of trade credit value in the operational account of the first user and, if required and available, in the drawdown account of the first user.

23. The method of claim 19, wherein confirming the availability of the requested amount of trade credit value in the drawdown account further comprises establishing the drawdown account for the first user.

24. The method of claim 23, wherein establishing the drawdown account for the first user further comprises allowing the first user to register for membership in a trade credit settlement system.

25. The method of claim 24, wherein establishing the drawdown account for the first user further comprises receiving an approval of a sponsor-member of the trade credit settlement system of a request by the first user for the drawdown account.

26. The method of claim 1, wherein transferring the requested amount of trade credit value further comprises transferring the requested amount of trade credit value from at least one of an operational account of the first user and a drawdown account of the first user to an operational account of the second user.

27. The method of claim 26, wherein transferring the requested amount of trade credit value further comprises transferring the requested amount of trade credit value from the operational account of the first user and, if required and available, from the drawdown account of the first user, to the operational account of the second user.

28. The method of claim 26, wherein transferring the requested amount of trade credit value from the operational account of the first user further comprises issuing the requested amount of trade credit value to the operational account of the second user and canceling trade credit value in the operational account of the first user having a present value equal to a present value of the issued trade credit value.

29. The method of claim 26, wherein transferring the requested amount of trade credit value to the operational account of the second user further comprises establishing the operational account for the second user in a trade credit settlement system.

30. The method of claim 29, wherein establishing the operational account for the second user further comprises allowing the second user to register for membership in the trade credit settlement system.

31. The method of claim 26, wherein transferring the requested amount of trade credit value from the drawdown account of the first user further comprises issuing the requested amount of trade credit value to the operational account of the first user and issuing an offsetting amount of trade credit value to the operational account of the second user.

32. The method of claim 1, wherein transferring the requested amount of trade credit value further comprises transferring the requested amount of trade credit value in the form of a trade credit.

33. The method of claim 32, wherein transferring the requested amount of trade credit value in the form of the trade credit further comprises transferring the trade credit as an electronic promissory obligation.

34. The method of claim 1, wherein allowing the transferred amount of trade credit value to be used by the second member in settlement of another transaction for the second user further comprises allowing the second user to liquidate the trade credit value to a credit on the second user'"'"'s account.

35. The method of claim 1, wherein allowing the transferred amount of trade credit value to be used by the second member in discounting for cash before a pre-defined maturity of the trade credit value further comprises allowing the second user to liquidate the trade credit value for cash at a pre-determined discount rate prior to the pre-defined maturity.

36. The method of claim 1, allowing the transferred amount of trade credit value to be used by the second member in holding through to the pre-defined maturity of the trade credit value further comprises debiting a predesignated account of the first user for the balance due on the trade credit value at the pre-defined maturity.

37. A system for settling a transaction using trade credit value, comprising:

means for storing trade credit value for a first user that is a divisible, continuously available, transferable, discountable, and credit enhanced to investment grade status promissory obligation;

means for receiving a request from the first user to transfer a pre-determined amount of the trade credit value from the first user to a second user in settlement of the transaction;

means for confirming an availability of the requested amount of trade credit value stored for the first user for settlement of the transaction;

means for transferring the requested amount of trade credit value from the first user to the second user; and

means for allowing the transferred amount of trade credit value to be used by the second user in any of settlement of another transaction for the second user, discounting for cash before a pre-defined maturity of the trade credit value, and holding through to the pre-defined maturity of the trade credit value.

38. The system of claim 37, wherein the means for storing the trade credit value further comprises an operational account for the first user residing on a transaction credit settlement system server.

39. The system of claim 38, further comprising means for establishing the operational account for the first user on the trade credit settlement system server.

40. The system of claim 39, wherein the means for establishing the operational account for the first user further comprises means for allowing the first user to register for membership in a trade credit settlement system.

41. The system of claim 40, wherein the means for allowing the first user to register for membership in the trade credit settlement system further comprises means for receiving an approval of a sponsor-member of the trade credit settlement system for the first user'"'"'s registration for membership.

42. The system of claim 41, wherein the means for receiving the approval for the first user'"'"'s registration for membership further comprises means for allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system.

43. The system of claim 42, wherein the means for allowing the sponsor-member to register for sponsor-membership further comprises means for recognizing the sponsor-member as a valid trading entity by the trade credit settlement system.

44. The system of claim 37, wherein the means for storing the trade credit value further comprises means for storing trade credit value in the form of a trade credit.

45. The system of claim 44, wherein the means for storing trade credit value in the form of the trade credit further comprises means for storing the trade credit as an electronic promissory obligation.

46. The system of claim 37, wherein the means for storing trade credit value further comprises means for storing the trade credit value as at least one of a divisible trade credit value, a continuously available trade credit value, a transferable trade credit value, a discountable trade credit value, a credit enhanced trade credit value, and an investment grade trade credit value.

47. The system of claim 37, wherein the means for receiving the request to transfer the pre-determined amount of the trade credit value from the operational account of the first user further comprises means for establishing the operational account for the first user in a trade credit settlement system.

48. The system of claim 47, wherein the means for establishing the operational account for the first user further comprises means for allowing the first user to register for membership in the trade credit settlement system.

49. The system of claim 48, wherein the means for allowing the first user to register for membership further comprises means for receiving an approval of a sponsor-member of the trade credit settlement system for the first user'"'"'s registration for membership.

50. The system of claim 49, wherein the means for receiving the approval for the first user'"'"'s registration for membership further comprises means for allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system.

51. The system of claim 50, wherein the means for allowing the sponsor-member to register for sponsor-membership in the trade credit settlement system further comprises means for recognizing the sponsor-member as a valid trading entity by the trade credit settlement system.

52. The system of claim 37, wherein the means for receiving the request to transfer the pre-determined amount of the trade credit value from the drawdown account of the first user further comprises means for establishing the drawdown account for the first user.

53. The system of claim 52, wherein the means for establishing the drawdown account for the first user further comprises means for allowing the first user to register for membership in a trade credit settlement system.

54. The system of claim 53, wherein the means for establishing the drawdown account for the first user further comprises means for receiving an approval of a sponsor-member of the trade credit settlement system of a request by the first user for the drawdown account.

55. The system of claim 37, wherein the means for confirming the availability further comprises means for confirming the availability of the requested amount of trade credit value in at least one of an operational account and a drawdown account of the first user.

56. The system of claim 55, wherein the means for confirming the availability of the requested amount of trade credit value in the operational account further comprises means for establishing the operational account for the first user in a trade credit settlement system.

57. The system of claim 56, wherein the means for establishing the operational account for the first user further comprises means for allowing the first user to register for membership in the trade credit settlement system.

58. The system of claim 55, wherein the means for confirming the availability further comprises means for confirming the availability of the requested amount of trade credit value in the operational account of the first user and, if required and available, in the drawdown account of the first user.

59. The system of claim 55, wherein the means for confirming the availability of the requested amount of trade credit value in the drawdown account further comprises means for establishing the drawdown account for the first user.

60. The system of claim 59, wherein the means for establishing the drawdown account for the first user further comprises means for allowing the first user to register for membership in a trade credit settlement system.

61. The method of claim 60, wherein the means for establishing the drawdown account for the first user further comprises means for receiving an approval of a sponsor-member of the trade credit settlement system of a request by the first user for the drawdown account.

62. The system of claim 37, wherein the means for transferring the requested amount of trade credit value further comprises means for transferring the requested amount of trade credit value from at least one of an operational account of the first user and a drawdown account of the first user to an operational account of the second user.

63. The system of claim 62, wherein the means for transferring the requested amount of trade credit value further comprises means for transferring the requested amount of trade credit value from the operational account of the first user and, if required and available, from the drawdown account of the first user, to an operational account of the second user.

64. The system of claim 62, wherein the means for transferring the requested amount of trade credit value from the operational account of the first user further comprises means for issuing the requested amount of trade credit value to the operational account of the second user and canceling trade credit value in the operational account of the first user having a present value equal to a present value of the issued trade credit value.

65. The system of claim 62, wherein the means for transferring the requested amount of trade credit value from the drawdown account of the first user further comprises means for issuing the requested amount of trade credit value to the operational account of the first user and issuing an offsetting amount of trade credit value to the operational account of the second user.

66. The system of claim 62, wherein the means for transferring the requested amount of trade credit value to the operational account of the second user further comprises means for establishing the operational account for the second user in a trade credit settlement system.

67. The system of claim 66, wherein the means for establishing the operational account for the second user further comprises means for allowing the second user to register for membership in the trade credit settlement system.

68. The system of claim 37, wherein the means for transferring the requested amount of trade credit value further comprises means for transferring the requested amount of trade credit value in the form of a trade credit.

69. The system of claim 68, wherein the means for transferring the requested amount of trade credit value in the form of the trade credit further comprises means for transferring the trade credit as an electronic promissory obligation.

70. The system of claim 37, wherein the means for allowing the transferred amount of trade credit value to be used by the second member in settlement of another transaction for the second user further comprises means for allowing the second user to liquidate the trade credit value to a credit on the second user'"'"'s account.

71. The system of claim 37, wherein the means for allowing the transferred amount of trade credit value to be used by the second member in discounting for cash before a pre-defined maturity of the trade credit value further comprises means for allowing the second user to liquidate the trade credit value for cash at a pre-determined discount rate prior to the pre-defined maturity.

72. The system of claim 37, wherein the means for allowing the transferred amount of trade credit value to be used by the second member in holding through to the pre-defined maturity of the trade credit value further comprises means for debiting a predesignated account of the first user for the balance due on the trade credit value at the pre-defined maturity.

73. A financing and payment method incorporating a new use of at least one trade credit, which is utilized by a Buyer, a Seller, and a Financial Intermediary, said method including the following steps:

concluding an membership agreement by the Buyer, the Seller, and the Financial Intermediary, which defines rights and obligations of each party to the other that include the use of at least one trade credit that is a divisible, continuously available, transferable, discountable, and credit enhanced to investment grade status promissory obligation;

entering an agreement by the Buyer for a transaction with the Seller;

optionally modifying the transaction agreement to extend payment terms of the transaction agreement through negotiation between the Buyer and the Seller;

issuing a trade credit to the Seller in payment of the transaction, the trade credit having payment terms according to one of the transaction agreement and the modification of the transaction agreement, and simultaneously accepting an obligation by the Buyer to pay an amount equal to the transaction payment; and

allowing the Seller to realize payment of the trade credit by either of presenting the trade credit for immediate payment of its face amount, less a discount amount, and receiving the face value of the trade credit at maturity.

74. The method of claim 73, wherein simultaneously accepting an obligation by the Buyer to pay an amount equal to the transaction payment further comprises simultaneously accepting an obligation by the Buyer to pay an amount equal to the transaction payment plus a cost to the Buyer determined by a credit-worthiness of the Buyer.

75. The method of claim 73, wherein allowing the Seller to realize payment of the trade credit by presenting the trade credit for immediate payment of its face amount, less a discount amount, further comprises allowing the Seller to realize payment of the trade credit by presenting the trade credit for immediate payment of its face amount, less a discount amount based on an investment grade rating of the trade credit.

76. The method of claim 73, wherein the Financial Intermediary provides an Active and a Reserve Account for the Buyer, the Active Account showing current trade credits receivable, as well as transaction details and history, including fees and charges, and the Reserve Account showing current trade credits payable, as well as credit available to be issued, and transaction details and history, including fees and charges.

77. The system of claim 73, wherein the Financial Intermediary provides an Active and a Reserve Account for the Seller, the Active Account showing current trade credits receivable, as well as transaction details and history, including fees and charges, and the Reserve Account showing current trade credits payable, as well as credit available to be issued, and transaction details and history, including fees and charges.

78. The system of claim 73, wherein a Sponsor, as a further intermediary, works with the Financial Intermediary to introduce parties to enter membership agreements.