Crowdfunding is a financing method from which other similar ones have emerged. Like crowdlending, equity crowdfunding, donation-based crowdfunding, etc. But to tell the truth, there’s a member of this that few know: crowdfactoring.
Crowdfactoring: The unknown crowfunding model
It all starts with crowdfunding. This method of financing comes from crowdsourcing, obtaining resources through an open invitation to the audience. By default, crowdfunding consists of a group of people who give money in exchange for a reward. But over time, other models emerged that use another return on investment.
Equity crowdfunding grants a shareholding in exchange for money. Crowdlending involves returning the money borrowed after earning income. And just like these, there are many other models. However, one has emerged that’s not as well known as the previous ones. Which is called crowdfactoring or investment/financing in discount of bills/invoices. Or simply called bill discounting.

According to the Mercadoprestamos credit and loan website, crowdfactoring would have emerged in Spain. It’s not known at what moment exactly it did, but already in 2014 there were platforms dedicated to this business. Ever since it was implemented, it has functioned as an effective financing method for all types of companies.
Crowdfactoring consists in the discounting of bills or invoices. According to the Circulantis crowdlending platform, “it allows investors to lend money to companies with the guarantee of the collection rights of the invoices they issue to their most solvent customers.” This can be a complex concept for some. But we’ll explain it as best as possible.
Bill discounting and crowdfactoring
To enter the subject, it’s necessary to define what’s a “bill” or invoice in some countries. According to Moneda@Moneda, a bill in this case is “a document by which the signatory agrees to pay X amount [of money] on a stipulated date to the holder thereof.” The expiration of these documents is usually short term. And they don’t usually contain very high amounts of money.
Bill discounting is then a way in which it’s possible to collect the money before the expiration of the document. Through the intervention of a third party, which advances the money in exchange for a commission. Later, this third party will be responsible for charging the bill once the document is endorsed by the transferor. Ergo, they pass their right to charge the bill to the third party.

In the case of crowdfactoring, contributors offer money to companies. How then do they get an investment return? In exchange for the money, the company grants the right to the contributor to collect one of their invoices or bills issued by high solvency clients. The key to this financing method is that several investors can invest to collect part of a particular invoice.
So we have that a crowdfactoring platform is a revenue. In this case, for companies that want to sell their invoices receivable to investors who want to buy them (or a part of them) in exchange for profitability. The only risk involved is the possible insolvency of the bill’s issuer. For this there, are two types of bill discounting, recourse and non-recourse.

Some of the advantages of crowdfactoring are the low amount to invest. Along with others such as the possibility of obtaining a high return after an investment. Companies can get money for their projects relatively quickly through this method. As long as the payment of invoices to investors can be guaranteed.
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