Using the simplest comparison possible, what is Credex?
In the simplest comparison possible, consider Credex a zero interest overdraft. The credit in this ‘overdraft’ can only be spent with other companies on the Credex network. To repay this ‘overdraft’ you have to sell goods and services to other companies on the network and be paid with their ‘overdraft’. You pay a flat annual fee based on the size of your company to access this service. Once you are on the network Credex acts as a broker to connect you with clients and suppliers to help everyone use their interest free ‘overdrafts’.
Are you regulated by the Financial Conduct Authority (FCA)?
The short answer is no. The creation of credit by Limited businesses or partnerships within a closed network is not currently regulated by the Financial Conduct Authority (FCA). However, Credex is hoping that it can grow its network to provide a significant level of credit to businesses in the West Midlands. We are therefore implementing policies that are usually expected by the FCA, including Anti Money Laundering, Privacy and Accountability. We are going beyond the standards of the regulated industry by implementing key network requirements within our companies Articles of Association. These requirements include; maintaining a balanced network, publishing the current transaction levels and being accountable to stakeholders. We hope to become a model that future regulations will be based upon.
I'm a small business, I am interested in selling through Credex, but I don't buy a huge amount?
I am glad you see the benefits of a local business network, beyond the advantages of interest free credit. However, often one of the main costs for small businesses is the owner’s and staff’s time. With every company account in Credex comes the ability to set up personal accounts for directors and employees. These cannot go negative and you are only able to move positive company balances across. So if you small business sells through Credex, you could pay yourself into a personal account and use it for personal purchases. Our initial focus is business to business, however we are ultimately aiming to develop a diverse network of independent retail businesses.
What if I go negative in my account and then my company walks away?
Firstly, you aren’t able to access large credit levels until you prove there is a demand for goods and services. So the network has a little protection from companies doing this. However, it will still happen. The contract with us is structured so that we are able to pursue you for GBP Sterling for any negative balances you leave behind on the network. If you company goes into liquidation, Credex will just be another creditor that will need to be paid from whats left. Finally, this is a network of local businesses, any unsavoury behaviour will be remembered not just by Credex, but everyone on the network. Would you really want such a bad reputation as a businessman?
What if what my business needs is not on the network?
One of the services that companies have access to when they join the network is a broker. Automatic brokering connects you with potential clients and suppliers that are already on the network. If the network does not have companies to meet your needs, you are assigned a broker. They will aim to fill your supply and demand requirements. There is two ways this can be achieved. It would be either finding completely new companies to join the network, or you engage with the companies you already work with about the advantages of Credex. You all get it free for six months, so what is there to loose?
Do I have to pay in Credex?
Credex aims to support greater levels of trade among its members. Businesses can choose what level of transactions actually go through the network. You can pay 100% in Credex, or blend your payments, say 50% Credex and 50% GBP Sterling. You may find that you make connections through the network and go on to do 100% of your future trade in GBP Sterling. That’s fine. You are only required to settle the negative balance before you leave. That’s all you “have” to do.
I've tried to borrow from other creditors, its expensive. Interest free credit sounds too good to be true?
The banking system in the United Kingdom has lost its way. Decades ago bankers were boring, they extended credit at low interest and helped small businesses grow. As seen with the problems around the financial crisis and misselling scandals, banking has become a casino, focused on short term profits. Credex makes its money from a flat annual fee. Credit in its network is issued interest free, but it can only be spent with other companies who use the system. Credex is on your side to ensure you have clients and suppliers on the network, otherwise it wouldn’t work and we wouldn’t get our annual fee. A positive relationship with your creditor, who is trying to help you grow your transaction volume. It does sound too good to be true, but honestly its the truth.
How much can my business actually borrow?
Credex bases your credit level on two things at different stages of your relationship with the network. When you first join Credex, you will be credit checked and your credit limit will be around 10% of that suggested by the credit check. This protects the network and ensures that you can’t borrow without being able to settle your account. Once you demonstrate there is a demand for your goods and services on the network through making sales, we will automatically increase your credit limit. We would aim to increase it up to the level suggested by the initial credit check, however you will have the option to increase it further if you have high transaction volumes on the network.
How long is this credit for?
Credex is unlike other creditors, when credit is issued in one company’s account for a purchase, it is debited in the sellers account. We do have an initial 12 month period that we consider a time limit for this credit. However, our focus is less on how quickly you pay back the credit and more on the transactions you are conducting. If you issue credit and then do not sell into the network for the 12 months, it flags up on our system and we will contact you. If you issue credit and are then buying and selling through Credex over the 12 months, then even if you are still negative at the end of it, we are ok with it. See Credex more like an overdraft than a loan and for us, every negative balance is a positive balance somewhere else on the network.
Ok, credit limit is based on my credit check, but what figures are we talking?
The level of borrowing will be ultimately based on the size of your company. But we would expect micro businesses of 1-5 employees to eventually unlock credit limits of the equivalent of £10,000s. We would expect medium to large businesses to eventually unlock credit limits of the equivalent of £100,000s.
What do you mean by the "equivalent" of pounds?
The credit in Credex is equal to the value of GBP Sterling, but it is not actually GBP Sterling. We would be misleading you if we said you were borrowing GBP Sterling. You are accessing credit that all of the companies on the network accept as payment for goods and services. All businesses on the network consider the credit to be equal to GBP Sterling.
Why would my business convert its money into your alternative currency?
If this is your question, you misunderstand what Credex is about. We are not a cryptocurrency or local currency, that requires you to “buy” into their system. The credit in Credex is created when companies make trade. It is additional to the revenue that your company currently has in traditional currencies. The aim of the system is to provide a holistic financing solution, to enable you to purchase in supplies with Credex, allowing you to focus your precious GBP Sterling on more important issues.
I've read your site and I still don't understand where the "money" comes from?
The traditional banking system requires a lender to have money, before offering credit to a customer. However, there are many other ways that credit can be issued. The Credex Network allows companies to issue one another interest free credit. You don’t need money to begin with, you just need two sides of a trade. The one side goes negative to purchase an item and the other side goes positive to sell the item. The system of credit only works within a closed network. If there is enough diverse businesses accepting the credit as payment, the seller of the item can use the positive balance purchase their own supplies from other companies. The business who went negative in the system, has to sell their own goods and services within the network to settle their negative balance.
Can I directly exchange the credit in Credex for GBP Sterling?
No, the credit in Credex is issued within the network and can only be spent in the network. Our system does not allow companies on the network to exchange it for GBP Sterling, as this would be outside of the network. However, if a company leaves the network without settling their negative balance, they will be required to settle to amount with GBP Sterling. The aim of this process is to discourage companies from walking away with liabilities, opposed to profiting from the creation of credit.
Is Credex a cryptocurrency?
No, Credex does not use a cryptocurrency token for its complementary currency. The currency within Credex is actually credit that is issued and later settled. A cryptocurrency would not work in this network due to its commodity-like value. Cryptocurrency is highly volatile and it price fluctuates. The complementary currency in Credex will always be fixed at the same price of GBP Sterling.
Does the value of the currency change in any way?
The value of the credit within Credex will always be the same as GBP Sterling. The value would therefore change slightly against currencies such as the US Dollar, as GBP Sterling is freely exchanged for it. However, the credit in Credex is not like Bitcoin, which has its own value and constantly fluctuates.