Frequently Asked Questions
Who can subscribe to 0KM-F?
All limited liability companies that have receivable invoices from other limited liability companies. All companies will be checked to verify their details and the power to sell of the directors or officers. To access the Marketplace, the subscribing companies must sign a master agreement regulating the trading and assignment of the invoices, and the obligations towards 0KM-F.
How can I subscribe?
You can apply on-line at 0KMF.com. It takes 15 to 20 minutes. Requested documents can be scanned and uploaded on-line, as well as the signature of the master agreement.
How can I start an auction?
Always through the 0KM-F website. Submit the invoices you want to sell and provide the details of the End Debtor. After the invoice has been approved by 0KM-F, you decide when to start the auction, how long to keep it open and which is initial selling price.
How does the auction work?
During the auction, you can show your offer price and see the bid prices submitted by the investors. You can change your price or wait the an investor improves his price. In a few words, it is a real market. Prices are expressed as percentage of the face value of the invoice. When the selling and buying prices matches, the trade is closed and you will receive the dealt amount of money.
How is the price shown?
Both the selling and buying prices are expressed as percentage of the face value of the invoice. (including VAT). For example, if you want to sell an invoice with face value EUR 50.000, and you want to receive EUR 49,000, you have to show a price of 98%. If an investor shows a price of a 95%, it means it is willing to pay EUR 47,500 to buy the invoice.
How long does the auction last?
In theory the auction can last until the expiry of the invoice. 0KM-F suggests to keep it open 1 to 3 days.
Which is the minimum face value of the invoice?
The minimum face value is Eur 10,000, including VAT.
Who can be the End Debtor (client) of the invoice?
Any limited liability company of the European Union.
The face value has to be in Euros?
Not necessarily: invoices can have face value in Euros, US Dollars, GB Pounds and Swiss Francs.
Which is the relationship between the company and the investor?
The relationship starts only when an invoice is sold. In this case the company sells at the agreed price the invoice with no recourse. This means it is free from all risks of missed payment of the invoice by the End Debtor.
What determines the selling price?
Since the invoice sale is with no recourse, the invoice price depends, first, of the creditworthiness and the financial strength of the End Debtor, and, second, on the duration of the invoice. The price will also slightly depend on the risk that the seller does not perform the underlying contract obligation, so the investor will account also for this risk besides the primary End Debtor credit risk.
Am I responsible after the invoice sale?
Since you are a seller of invoices with no recourse, you will not be responsible for the payment failure of the End Debtor. If the payment failure depends on disputes related to the performance of the underlying contract, then the investor can enforce the payment of the invoice also against the seller.
Which collateral should I post?
None, of any kind.
Should I guarantee a minimum amount of invoices?
Only that of the minimum face value of the single invoice. Differently from factoring, you have no obligation to discount all invoices with one or more clients.
Does the End Debtor (client) know I am selling the invoices with him?
Yes. Since the sale is with no recourse, the End Debtor will be notified the sale and the new payment instructions for the final payment. When an invoice is submitted, 0KM-F asks the End Debtor for its recognition.
How will I be paid after the sale of the invoice?
The payment of the agreed price will be wired by the investor on the same date of the sale.
Which costs do I have to pay to subscribe to 0KM-F?
The subscription fee is paid only once after you are admitted to the Marketplace. The transaction fees are paid only if a sale is closed on the platform. They can range from 0.40% to 0.70% of the face value of the invoice. Updated prices can be asked at info@0kmf.com
Do I need specific skills for the auction?
Not more specific than those you have to run the every-day business of your company. The platform is intuitive and it needs a short training. In any case, the support team of 0KM-F is always happy to help if you need.
Does 0KM-F buy my invoices?
No. 0KM-F is only a tool to help the trade of invoices between selling companies and buying investors. 0KM-F does not have a direct interest in the trades dealt on its marketplace in any circumstances.
Who are the buying investors?
They are investment funds, family offices, hedge funds, and other entities that want to invest in alternative corporate debt assets that allow risk diversification.
What happens if 0KM-F goes out of business?
Even if we hope it does not happen, if 0KM-F went bust o terminated its operations, the only damage you will suffer is that yuo will not be able to sell anymore invoices on its marketplace. 0KM-F does not hold your funds in any case.
Is 0KM-F linked to a bank?
No, 0KM-F ha only private shareholders with no interests or roles in banks or other financial institutions,
Is 0KM-F subject to the control of any authority?
Since it is a pure intermediation platform for an assets not regulated by financial authorities, 0KM-F is not subject to the control of the FCA or other supervisors. Obviously, 0KM-F operates in full compliance with the Law for all activities and relationships with members of its marketplace.
Where 0KM-F is?
0KM-F is limited liability company incorporated under the Law of England and Wales, and it is based in London, where its registered offices are. All contracts are regulated by the Law of the United Kingdom, although the invoice sale contracts comply also with the law of the country of the End Debtor in order to have full validity.
More questions?
Write to info@0kmf.com and we will be happy to answer to any other question you may have.
Do I qualify as investor on 0KM-F?
If you are an institutional investor (asset manager, pension scheme, foundation, corporates), a family office, a self-certified high net worth individual or a self-certified sophisticated investor, then you are eligible to become an investor on the 0KM-F platform.
How can I apply?
You can start the application on line. All the documents needed to qualify you as an investor, and to comply with the current regulation (Know Your Customer and Anti-Money Laundering) are indicated on the website of 0KM-F.
Is there a minimum amount I have to invest?
0KM-F does not require any minimum amount to invest. Investors will decide how much to invest by buying the invoices traded on the electronic market. In any case no funds are held or managed by 0KM-F on investors' behalf on its own or segregated accounts.
So where are my funds held?
You will keep your money on your own accounts and you will be instructed where to pay after the purchase of one or more invoices. Money paid by the client(s) /debtor(s) of the invoice(s) at the expiry will be credited on a centralised segregated account and immediately transferred to you by 0KM-F. So, apart from the strictly necessary time needed to transfer the funds to you from the segregated account (less than 25 hours), you will always keep your fund on your accounts.
What happens if 0KM-F becomes insolvent?
Since investors' funds are held on segregated accounts, if only for the strictly necessary period to instruct the bank for the transfer (less than 24 hours), they cannot be transferred to 0KM-F accounts. This means that if 0KM-F becomes insolvent, no business disruption or financial loss will be suffered by investors (or any other participant to the platform).
Does 0KM-F also sell or buy invoices?
No. 0KM-F is only the administrator of the platform and does not have any interest both in buying or selling.
What are the controls 0KM-F operates on invoices?
Once a company /seller submits one or more invoices to the platform, 0KM-F asks the client / debtor to recognise the invoice and that it will pay it at the expiry. 0KM-F does not evaluate the creditworthiness of the client /debtor, even though a rating can be obtained by the investor through partner companies that provide this type of service.
How does the auction work?
Once the invoices are accepted by 0KM-F and placed on the electronic marketplace, an offer price is shown by the companies / sellers, while investors can show a bid price. Prices are shown as a percentage of the notional amount of the invoice. A price can be shown also for a fraction of the total amount, if the investor wants to limit the exposure to the name, when the bid and ask prices match, a deal is closed. The auction lasts 48 hours. Once the investor / buyer buys an invoice, it is requested to transfer the amount corresponding to the traded price to the seller within the end of the trade date.
What happens after the purchase of an invoice?
A term sheet is sent out to both parties to identify the invoice(s) traded. The contract is signed digitally. 0KM-F will send a notification to the client / debtor that its invoice(s) has (have) been sold to the investor and it is instructed to pay at the expiry on the segregated centralised account. 0KM-F will transfer the funds from the clients / debtors to the investors / buyers immediately after they are received.
What happens if the client /debtor doesn't pay?
Clients / debtors sometimes do not pay on time. Delayed payments do not necessarily mean that the clients / debtors will fail the payment. Typically invoices are paid after their expiry, within 30 days. 0KM-F will contact the client /debtor to solicit the payment. If after the grace period of 30 days the invoice has not been paid yet, the investor can start a collection procedure, also with the assistance of partner specialists available though the platform, if it prefers so.
Can I buy protection for credit losses?
Yes, from a partner credit insurance company if you wish. You will access to their services directly through the platform. Terms and conditions vary according to the client / debtor. 0KM-F does not have any interest in the credit insurance company and does not receive any revenues for the protection sold through the platform. Investors can obviously buy credit protection from other insurance companies outside the platform.
Can I monitor the exposure to a client / debtor?
Yes. You can set up credit lines for each client / debtor of the invoices traded on the platform. If the amount traded is not within the credit limit amount, the platform will not allow the closing of the deal, unless the investor increases the line. To easily set up credit lines, you can also define different rules to apply to clients according to its industrial sector, rating, revenue turn-over. The credit line will be automatically created for all clients / debtors for which the rules apply. Credit lines are actively updated by 0KM-F, so that, for example, when an invoice is paid, the line is restored by the amount received by the investor.
Can I automatically buy invoices?
Yes. You can set-up rules to build your portfolio, so that you can automatically show a bid price for invoices with specific characteristics in terms of industrial sector, rating of the client /debtor, time to the expiry. The bid start with a minimum level and updates automatically up to a maximum level if other investors are paying more. The rules allow investors to build automatically a target portfolio, simultaneously checking for the credit line availability. The combined use of the credit line and the portfolio building strategies makes it possible for investors to automatically manage the credit exposures and the funds allocation.
How risky is the investment in invoices?
It is a short term investment (the average expiry is about 3 months) into corporate debt. As such, the riskiness depends on the creditworthiness of the client / debtor and, generally, of the economic system. It should be stressed once the invoices are bought, the company / seller has no obligation to pay if the client / debtor fails the payment, i.e.: the sale of the invoice is with no recourse clause.
Where does 0KM-F earn money from?
0KM-F charges the investors with a fee for each trade closed on its electronic marketplace. The fee is a percentage of the notional of the invoice and varies according to the expiry and volume traded over the last one year period. For a 3 month expiry invoice, the fee is 0.5% of the notional. Volume discount applies. The fee schedule and the discount schedule are agreed upon the signing of the contract between the investor and 0KM-F. No other fees or costs are charged by 0KM-F. Additional services bought from partner companies are paid directly to them by the investors.
Is the fee charged by 0KM-F subject to VAT?
No. 0KM-F is not registered for VAT, so it will not charge (or claim) VAT on fees.
Is 0KM-F regulated?
0KM-F is not regulated since it does not manage or invest any of its own funds or on behalf of any third party. Moreover, 0KM-F does not take deposits nor provides investment advice.
More questions?
Write to us at info@0kmf.com and we will answer to all your other questions you may have. We can also call you if you prefer.
