The No Upfront Fee, Longer Term,  More Flexible Alternative to Pipe

For public companies, True Sale enables compliance with cash reporting regulations and faster cash conversion. Several US and international stock exchanges mandate quarterly cash flow statements and proof of adequate liquidity, and True Sale of long-term cash generating assets— in exchange for immediate cash—to a company like Ratio is a great tool to stay in compliance. True Sale is also a more pragmatic way to unlock additional liquidity from the balance sheet without taking on new debt or dilution. 

For private companies, True Sale offers a new source of growth capital that is distinct from venture debt, equity capital, or revenue based financing. It is a new tool in the growth capital tool-kit that provides more flexibility and choice around what contracts to sell to a company like Ratio, and what % of future receipts to sell, depending on projected cash flow timings. With no covenants, restrictions, and less complicated accounting treatments, it is a powerful weapon to use to extend your runway on your terms.

Ratio Trade or Ratio Boost are not debt. We purchase each contract and advance the cash to the seller as if it were paid by the buyer at the time of the purchase.
It is not a loan because we purchase each contract from you and assume the risk. The purchase is executed using our underlying financial instrument, called the Future Receipts Purchase Agreement (FRPA), which is considered a “True Sale,” and has been vetted by leading law firms and leading accounting firms for publicly listed companies.

Ratio’s customers range from large public companies and large private enterprises to venture-funded early-stage and growth-stage startups, and bootstrapped companies with no outside investments.

All we look for is strong contractual commitment to future cash flows.

Ratio Trade is different from Revenue Based Financing in a fundamental way:
There is no automated repayment every month as a % of revenues.
You pay Ratio only when the customer related to the contract that you sold to Ratio pays!
‍Your relationship with Ratio is specific only to the contracts that were purchased by us. This allows you to super-stretch your runway and have more flexibility on repayments.
In addition, most revenue based financing services are not True Sale — meaning, the capital offered is treated as debt, and not as a direct substitution of assets for cash.

Traditional factoring is a financial arrangement where companies can sell their pending invoices (accounts receivables) to a third party (factoring companies, lenders, or banks) in exchange for fast cash. Traditional factoring typically does not take into consideration uninvoiced but contractually committed services that have not been delivered yet. 

In contrast, Ratio is primarily about converting long-term contracts into cash. We also factor invoices if a client requests, but the primary goal is to pull un-invoiced, contractually binding cash receipts from the future to the present.

Discount rates are determined by our risk engine that uses proprietary algorithms to assess the credit-worthiness of both the seller (SaaS / Tech company) and, most importantly, the customer. The discount rate is determined based on the combined risk score of the Seller and Seller’s customer.

In case of dispute between the Seller (SaaS or tech company) and the customer, the Seller is required to remedy the dispute. If the dispute is not resolved, any contracts purchased by Ratio have to be repurchased back by the Seller.

It is up to the Seller. In our Boost model, Ratio is responsible for collecting from the Seller’s customer/buyer. In the Trade model, Ratio is unknown to the buyer and the Seller is responsible for collections.

Ratio purchases contracts for cash at a small discount. The discount can be paid by the seller or the buyer depending on which product (Trade or Boost) is being utilized to get cash upfront by the Seller. The discount percentage depends on the credit worthiness of both the seller and the buyer.

Ratio Boost is similar to consumer buy-now-pay-later but focuses on business buyers.
In Boost, the financing is embedded into the sales workflow and the financing costs can be passed on to the buyer. It can be embedded into the vendor’s website or their sales processes encapsulated in CRM and CPQ.

We do not pull any personal credit scores or require personal guarantees, but may access a business credit report associated with your EIN. Ratio uses proprietary algorithms and underwiring to score each business and assess the risk.

Our advances are not loans or debt. Hence we do not have the concept of principal and interest. However we do discount each contract based on the risk of the contract. The discount rate varies based on the term of the contract, risk of both the seller, and the risk of the buyer.