An invoice is a zero-coupon bond that nobody ever priced.
Factoring is bond pricing done over the phone. A business that is owed money calls a factor, the factor prices the paper privately, and the business takes two to five per cent off face for the privilege of not waiting. There is no screen, no curve and no second buyer.
Facture puts a price beside every invoice the moment it appears, because the buyers were already there.
Reading the book…
Why invoice finance never got a market
Not regulation, and not custody. It is that invoices are not fungible. Every receivable is a different customer, a different amount and a different number of days to maturity, so no two are the same asset. An order book needs something to book, and there is nothing here that repeats.
So price stays bilateral. It gets negotiated once, in private, by whoever picked up the phone.
The book itself shows it: almost as many customers as invoices, each owed a different amount on a different day.
So standardise the bid instead
A buyer does not offer for one invoice. They post a standing quote over a bucket, the way money-market desks have always quoted short paper:
Any A-rated paper, sixty days or less, at 8% annualised, up to $200k of exposure.
Now the assets stay unique and the buyers become fungible. Anything that arrives is priced immediately by reading the curve at its own rating and tenor. Nobody waits for a counterparty.
The instrument was always a bond
A discounted invoice is bought below par and redeems at face on a fixed date, with the discount being the yield. That is not a metaphor — it is the same instrument, and it is why a receivable can be described honestly as something tradeable. So it can be quoted the way short paper has always been quoted: off a curve, at a rating and a tenor.
The curve is just the bids, plotted
There is no model behind this line. Each point is somebody’s standing bid with escrowed capital behind it, which is what makes a quote firm rather than indicative.
What a rating is worth
Five moves
- 01
List
The invoice becomes an instrument when it is added, not when it is sold. Nobody waits on that at the moment money moves.
- 02
Quote
Priced by reading the standing bids where it sits. A confirmed invoice carries a live price, not a button that asks for one.
- 03
Match
Eligibility is checked before matching, so an ineligible counterparty is never matched and a refusal is an answer with a reason.
- 04
Settle
Delivery against payment. Neither side has to move first, and buyer capital never has to leave where it already lives.
- 05
Mature
The customer pays, and it routes to whoever holds the paper now — which is what makes this a secondary market at all.
One book, two lives
Seasoned paper is just shorter-tenor paper. An invoice sold at 4% on day zero lists into the same bids on day thirty and clears tighter, because less time remains. A buyer bids tighter on paper they know they can exit, so the secondary leg is what makes the first quote competitive.
Ratings are earned, not assigned
A customer starts unrated and their first invoice prices at the wide end. Every invoice they settle on time tightens it, permanently and visibly. No external source of truth exists for this credit, so a market in it has to manufacture its own record or price blind.
Non-recourse, and no holdback
A mandate is written against the customer’s rating, so the buyer carries the loss if the customer does not pay. Confirmation removes dispute risk at the point of listing, which is what buys the seller the last fifteen per cent conventional factoring holds back.
Every screen here exists to make one screen true
A confirmed invoice with a price sitting next to it, that moves as the bids move and the due date comes closer. Nothing in invoice finance works this way today, where a price is a phone call and a wait.