If e-commerce owners in the real world lack financing channels, their businesses may fall into a tight cash flow situation, ultimately leading to bankruptcy. However, there is now a solution provided on-chain!
In the traditional financial system, businesses usually rely on banks or factoring companies for 'invoice financing', but the processes are cumbersome, thresholds are high, and costs are significant. Huma Finance (HUMA)'s PayFi network is changing all of this by directly bringing 'future income' onto the blockchain, creating a brand new model for supply chain finance.
Pain points of traditional invoice financing
Complicated approvals: Banks need to verify business qualifications, contract authenticity, and credit scores, leading to lengthy processes.
Low financing efficiency: It may take weeks or even months from application submission to loan disbursement.
High thresholds: Small and medium-sized enterprises and cross-border entrepreneurs often cannot obtain sufficient financing limits.
Liquidity restrictions: Invoice financing often only targets a few large enterprises, unable to form an open market.
These pain points result in a significant number of small and medium-sized enterprises being unable to meet their funding needs, which is precisely a key link in the global supply chain.
Huma's model: On-chain invoice financing
Huma Finance's PayFi network moves traditional invoice financing to the blockchain through smart contracts and cash flow models:
1. Future income collateralization - Invoices, accounts receivable, or contract payment streams can be used as on-chain collateral.
2. Instant liquidity release - The protocol will release 70-90% of expected income in advance, with funds arriving in seconds.
3. Automated settlement - When invoice payments are settled, smart contracts will automatically complete repayments, saving cumbersome processes.
4. Open market mechanism - Investors can directly participate in invoice financing on-chain, forming a transparent decentralized supply chain finance market.
This allows businesses for the first time to bypass traditional financial intermediaries and directly convert 'credit' into 'liquidity'.
Why is Huma's model more advantageous?
1. Efficiency advantage
Smart contracts replace manual reviews, reducing financing time from weeks to minutes.
2. Inclusive finance
Small and medium-sized enterprises and cross-border entrepreneurs can also equally access financing opportunities, breaking the traditional financial bias towards large companies.
3. Risk transparency
All cash flows and invoice documents are recorded on the Huma chain, allowing investors to track in real time, reducing information asymmetry.
4. Global characteristics
Businesses can finance on a global scale, no longer limited by local banking systems.
The long-term impact of Huma: Upgrading supply chain finance
At the enterprise level: Small and micro enterprises can operate their cash flow more efficiently, avoiding bankruptcy risks due to prolonged invoice cycles.
At the investor level: On-chain investors can participate in real-world accounts receivable financing to obtain stable returns.
At the industry level: Forming a global and decentralized invoice financing market to promote the digitization of supply chain finance.
More importantly, Huma transforms supply chain finance from a 'closed system' into an 'open network', which not only enhances efficiency but also allows financial resources to flow more equitably to global producers.
In traditional finance, invoice financing is often a lifeline for small and medium-sized enterprises, but it is difficult to popularize due to threshold and efficiency issues. Huma Finance's PayFi network is reshaping this field through on-chain cash flow collateralization and smart contract execution.
When businesses can turn future income into instant liquidity at any time, the operational logic of the global supply chain will be fundamentally changed.
Huma is not just a DeFi protocol; it could become the cornerstone of decentralized supply chain finance, opening up a whole new world of financing for countless businesses and individuals.
