Incomlend, a Singapore-based invoice finance platform, has adopted InvoiceCheck, a blockchain tool that allows users to detect if another funder has already paid an invoice.
Invoice finance fraud continues to be a huge challenge for financiers – both alternative lenders and established banks – whose current systems can’t check whether an invoice has already been financed elsewhere.
Based on blockchain technology, Invoice Check seeks to tackle this problem. It can tell a financier if an invoice is potentially fraudulent or being double-financed, by cross-referencing it against a decentralised registry. Developed on the Ethereum platform, it was one of the early blockchain products to be launched last year by Trade Finance Market, a Singapore-based fintech company.
Raj Uttamchandani, the firm’s executive director, explained how the tool works: “A bank or factoring company simply enters basic invoice parameters to perform an initial check in less than 30 seconds. This data is stored on the blockchain and funders are alerted if there is a potential risk of double-financing.”
Being based on a decentralised ledger, data is protected from potential competitors and is tamper-resistant once on the blockchain.
Trade Finance Market also offers a solution called CollateralCheck, which similarly can investigate whether a warehouse receipt has been used multiple times to finance the same collateral.
In light of a series of fraud cases involving the duplication of documents, including warehousing company Access World and the Qingdao fraud, a growing number of financiers and fintech firms are labelling blockchain technology as the only way forward for maintaining authenticity in the world of trade.
The interest in new technology for this purpose also comes at a time when many new invoice financing marketplaces and platforms are emerging. These firms differentiate themselves through technology, utilising emerging tech to speed up transaction times and help shore up security.
Many of them are also embracing blockchain. Southeast Asian fintech startup Acudeen, for one, announced earlier this year that it would shift its online receivables marketplace onto the blockchain. UK-based Populous, meanwhile, recently claimed to have conducted the world’s first invoice sale on the blockchain. Its platform also allows for the use of cryptocurrency.
For Trade Finance Market – and users like IncomLend – the focus will now be on building widespread adoption of the blockchain tool – something which is essential to making it efficient.
“We invite all the fintech invoice trading platforms and other financiers to join the Trade Finance Market initiative to build the world’s first global immutable registry of receivables finance transactions based on decentralised ledger technology, contributing to making international trade finance a safer place,” says Dimitri Kouchnirenko, founding partner of Incomlend.