Freight Factoring: The First Blockchain Mile
The MaxxChain Approach to Factoring
In the logistics industry, factoring is a critical process, especially for smaller entities at the bottom of the supply chain. Immediate cash flows are essential for these businesses, given the vast number of trucks on the roads, generating over $550 billion in revenue annually.
In the traditional factoring process, invoices for completed shipments are sold to factoring companies at a discount in exchange for faster payment to the trucking company. Many trucking companies are forced to abide by hidden rules with regards to the factoring process however must comply in order to get the funding necessary for business survival. MaxxChain aims to disrupt this segment by leveraging blockchain technology to ensure secure and immutable data while providing automated and almost instantaneous funding to these smaller trucking companies through fully transparent blockchain transactions.
Smart Contracts: Automating Processes for Efficiency and Transparency
MaxxChain plans to elevate the factoring process by introducing smart contracts within the implemented blockchain processes. Upon receiving completed shipping contracts and invoices from trucking companies, the information is recorded on the blockchain via bridged web2 and web3 technologies, along with the implementation of smart contracts. Subsequently, the invoice is fragmented into equally valued tokens or NFTs within the smart contract, which are then deposited onto a specialized marketplace within the MaxxChain ecosystem. These tokens or NFTs will then become available for trade among specially tiered MaxxChain users for a predetermined period.
At the conclusion of the specified timeframe, any remaining tokens/NFTs are assumed by MaxxChain, and immediate funding is extended to the trucking company. Concurrently, a new invoice is automatically generated and forwarded to the broker for payment under the originating terms. MaxxChain collects its share of revenue upon receiving payment from the broker, and the remaining funds are distributed among token or NFT holders based on the initial agreement.
Throughout this process, AI technologies provide stakeholders with clear and immutable blockchain data, offering a transparent view of the factoring process from start to finish. In order to leverage AI and other technologies within this blockchain implementation process, MaxxChain has initiated discussions and will continue engaging with likeminded projects deemed experts in specific facets of the process, capable of providing immediate value to this initiative. While the above represents just one enhancement within a subset of the logistics supply chain, it exemplifies MaxxChain's commitment to disrupting longstanding practices within an industry that is vying for change.
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