Invoice2Cash works on the concept of netting off receivables against payables across businesses which would facilitate working capital management.
Netting off is a concept widely used in businesses with subsidiaries. However, for the businesses spread across the globe, this might not be applied efficiently owing to the country’s regulations in terms of the finance.
When there are multiple parties involved in a transaction, the netting-off of the transactions with the parties involved will help arrive at the optimized transaction value that would decrease the number of transactions, the currency involved and facilitate regular flow.
Background of Money Money
1) A product which has got a value with backend support, which is transferable and legally valid.
2) Why is money a scarcity these days?
3) Because the value is not fully backed up by precious metals like gold.
4) Being political money, over printing to finance the deficit of the government.
5) Government expenditure is mostly going to “freebies “, thus more deficit is being created by the day.
Real Money --- IS TRADE MONEY
1) Trade money is the product or service (with Value addition) which are sold.
2) However, due to the present monetary system in the country, the real trade money needs be converted into currency.
3) This is where the businesses are getting effected, which in simple terms is working capital!
4) Because of the scarcity of the currency, the working capital needs are not able to meet in terms of currency. Even though the trade money is available with the businesses.
1) The obvious answer is Barter system!
2) With the present trade and commerce across the globe now, Barter system will not work.
What is the Alternative?
1) The other best alternative could be set off of receivables against payables!
2) Is it Possible?
3) Normally a small group in a particular area can use this, provided their bills par among themselves.
4) Therefore, this method is having limitations!
5) What to do, if buyers and sellers are all across the country?
6) Here come the difficulties in setting off the bills!
1) The drawbacks of money
2) A medium of exchange -- It needs to be spent.
3) Store of Value -- It needs to be Held.
4) Measure of Value -- It needs to be assigned to a value
5) Thus, the character of money by itself is contradictory.
6) Therefore, credit money is the best alternative.
7) Since we cannot eliminate currency money at this juncture, limited use of currency money is assumed in the solution.