Thursday, May 28, 2009

May 28, 2009: Introductory Post

On November 17, 2008 the first transaction on The Receivables Exchange (TRE) was completed. I think we will look back on that day and that transaction as the start of a new era in the financing of small business.

TRE is a real-time, on-line auction market for accounts receivable. Some call it, I think derisively, “an EBay” for invoices. Those who would minimize the importance of providing a means to efficiently and economically liquefy one of the largest balance-sheet items of the most liquidity-starved segment of the business community are simply missing the elephant in the room.

TRE is new and it is far from perfect. It will inevitably be required to make adjustments as experience teaches its operators and its users some valuable (and some potentially expensive) lessons. All beginnings are hard.

But TRE is a game-changer. It is disruptive.

Those whose businesses face disruption will scoff at first and then resist but they will ultimately adjust to the new reality because they will have no choice.

I first learned of TRE in early March 2009. By April 1, 2009 I had signed up as a Buyer.

I told the TRE staff at that time that I would not trade on the exchange until I had observed it for a reasonable period and felt that I understood it. So I have been lurking for nearly two months: watching and taking notes, compiling a database and asking questions about technical details. TRE personnel have been very forthcoming in addressing my questions and concerns. They have been open to my suggestions and understanding of my criticisms.

I have reached a number of conclusions about both the current TRE operation and what I would change if it were up to me. I have also determined with some specificity what criteria I would use to participate in the TRE activity. And I have decided to not only begin to trade but also to write about the exchange, its operations, its strengths and its weaknesses.

It is not often that a truly new market is created. When one is created, though, it inevitably spawns an infrastructure of support facilities and activities, among them comment and analysis by third-party observers.That is the purpose of this blog…to observe and comment on both the good and the bad of TRE.

I look forward to this. It is a journey and an experience that I invite you to share.

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