PPP （ PayPie）白皮书.pdf

Credit Risk Assessment Based on Blockchain Accounting THIS WHITE PAPER IS NOT A PROSPECTUS The sole purpose of this Whitepaper is to share ination about the proposed establishment and operation of the PayPie Blockchain Accounting plat to bring ultimate trust and transparency to the financial markets and the cryptographic blockchain tokens “PPP Tokens” for use within the PayPie plat. The ination set forth below may not be exhaustive and does not imply any elements of a contractual relationship. The Whitepaper does not constitute an offer or invitation to any person to subscribe for or purchase shares, rights or any other securities of PayPie or any affiliated entity. Any agreement in relation to the purchase and sale of PPP Tokens shall be governed by a separate document setting out the terms and conditions the “Terms and Conditions” of such agreement, which shall be made available at http// prior to the sale of any PPP Tokens. In the event of any inconsistencies between the Terms and Conditions and this Whitepaper, the Terms and Conditions shall prevail. Table of Contents 1 cutive Summary 1.1 Introduction 1.2 Today - Isolated, Closed Disconnected Systems 2 Target Audience 3 Journal Entries 3.1 Authentic Data 3.2 Foundational Accounting Framework 3.3 Risk Assessment to the Limits of Surgical Precisions 4 Problem of Liquidity 5 PayPie Plat Evolvement 5.1 Marketplace - Built on Risk Score Algorithm 5.2 Future of Accounting – Decentralized Accounting System 5.2.1 No Transaction Fees World 5.2.2 Partnerships and Ecosystem Integration 5.2.3 Independent Risk and Valuation Services 6 Technology 6.1 Smart Contracts 6.2 Storage 6.3 Data and API Services 7 Privacy - Protecting Supply Chain 8 PPP – The PayPie Plat Token 9 Timeline 9.1 Market 9.2 Project Transparency 10 Conclusion 11 Team 12 References 1 cutive Summary 1.1 Introduction PayPie is creating the first decentralized accounting plat for businesses that will provide real-time insight into financial data to achieve 100 accuracy for a credit risk algorithm that can be used globally. This analysis will be conducted using a single ledger approach and will consider businesses’ all-time historical financial data to safeguard and trans the way credit risk is assessed by lenders, investors, banks and other financial institutions while building a blockchain-backed accounting ecosystem. PayPie is the first fintech to develop credit risk profile of a business based on an in-built algorithm to constantly adjust it on the Ethereum blockchain depending upon the changes in more than 150 data points. This paper gives an overview on how PayPie will enable live financial audits, ends duplicate tasks, speed up credit approvals and improve the overall credit scoring process by disrupting business accounting landscape. 1.2 Today - Isolated, Closed Disconnected Systems The double entry accounting system was invented more than 600 years ago with the purpose of minimizing errors in the books of a company with the introduction of debit and credit. It allows firms to keep records that reflect what the firm owns and owes and what the company has earned and spent over any given period. However, accounting systems today are closed systems, and unethical practices from companies like Enron used accounting limitations to misrepresent earnings and change the balance sheet to show favorable perance. Today there is no connection between the books of one company with the other company they are buying or selling products or services to/from. It allows company A to cheat on the transactions that were happening with company B. This lack of transparency contributed to the largest bankruptcy in American history at that time and one of the biggest audit failure of our era. The double entry system solved the problem of companies knowing whether they could trust their books. However, to win the confidence of outsiders, independent public auditors also verify the company’s financial ination balance sheet, income statement, cash flow statement, etc.. The cost of an annual audit of a moderately sized company starts with the tens of thousands of dollars and can easily reach into six figures. Banks now lack real-time financial insights of business, and their decisions are based on historical data that may be six months to a year old and those numbers do not reveal enough quality data to obtain an accurate appraisal of the company’s financial health. Traditional financial institutions turn down 72 of funding requests and other lending players take 2 to 7 business days for due diligence, and if approved, it takes 2-5 business days to get money in the bank. This is not an ideal situation, and if small and medium- sized enterprises SMEs must accept deferred payments, then these enterprises need new ways to get financing. Ination in an accounting solution used by a business is usually isolated and closed to the public, so it is not possible to prove the immutability of records, accuracy of the data without exposing all the business secrets. Balance Sheet and P/L tells only half of the old story about business. Blockchain handles anonymity and is capable of bringing reliability by bringing transparency by publishing relevant, valuable data, and this is going to power the forward-thinking companies in coming years. 2 Target Audience “PayPie Single Ledger” is going to open an abundance of opportunities for millions of SMEs worldwide. PayPie takes a disruptive approach to the outdated s and completely offers a new, safe and secure way to expose financial data to lenders, auditors or regulatory authorities. There are many business use cases enabled by the trustless accounting, and being able to build a transparent trustful credit risk score of a business that can be used globally, is one of the most important. Because PayPie already had detailed transactional and financial ination on businesses in some cases better than banks, our proven risk algorithm will score and recommend the best SMEs that can be selected for financing. With the underlying health of a business visible on the blockchain, powerful innovation from PayPie could automate aspects of the regulatory, audit and accounting processes and may have long-term positive impact on the SMEs. Some of the first opportunities found are 1. Opening peer-to-peer lending opportunities to SMEs 2. Credit opportunities for banks, financial institutions, investors, invoice factoring companies 3. 3rd-party financial audit review data, accounting firms, and Governments 4. Insurers - Sell insurance products to SMEs 3 Journal Entries 3.1 Authentic Data At PayPie, we started looking at how to fix this problem and found that there were more than 60 million businesses worldwide that can be helped by introducing the blockchain in an accounting software. These firms can be further supported by a single ledger based on a decentralized accounting plat that ends duplication of efforts. PayPie brings transparency to the financials of business by introducing triple entry accounting. Each journal entry and transaction will be hashed and time-stamped on secure blockchain giving PayPie better visibility than banks into the financial health of a business that can be used to make a faster decision on lending. Blockchain in an accounting software brings better visibility into the actual income and expenses of the business thus reducing risk to the lenders. The underlying of a company’s financial is the journal entry data that is being entered manually or automatically in an accounting or ERP software. The data is used to calculate income, expense, payables, receivables, etc. and ultimately all financial reports like retained earnings, balance sheet, total assets or liabilities of a business. With PayPie, every journal entry data is allocated to the blockchain through automatic API connections to an accounting or ERP software. PayPie will use technology to assign a unique fingerprint to every transaction pered in an accounting software and publish them on the blockchain. Typical operations in a business are sales invoices, vendor bills, expenses, debit notes, credit notes, payroll and other income and expenditure. 3.2 Foundational Accounting Framework The PayPie plat introduces the blockchain into the existing workflows of an accounting software; the ones that are already trusted by SMEs. Accounting software SlickPie will provide the initial accounting logic framework and source code for the foundation of the PayPie plat to store journal entry and other accounting data. This saves us time in coding and writing those involved accounting logics, and we already have a great plat to start with. Adding blockchain record in the world of debit and credit effectively creates a triple entry accounting system. PayPie brings transparency to a modern business by building a plat that we will hash all the journal entries and other relevant ination from an accounting software on blockchain so that we can use the transparency track record to build a live credit scoring algorithm. We believe an accounting software has better visibility than banks into the actual finances of a business such as income, expenses, customers, vendors, payable, receivables, payroll, sales tax, VAT, etc. and we can use this ination to build a trusted plat. The days when financial reports for companies were outdated by 6-12 months are over, and now creditors have live quality data to obtain an accurate appraisal of the company’s financial health for a better term sheet for financing interest rate, maturity, annuity, collateral required, etc.. With all the new data factored in the risk premium, SMEs may qualify for a better term sheet for the credit. Finding lending opportunities is the biggest problem being faced by our competitors and that puts PayPie in a unique position. More than 16,000 SMEs already using the SlickPie accounting software and they are an asset to the PayPie plat and offer us an advantage as new plats often face the chicken or egg problem. We dont have this issue as we already have access to businesses to kick start our journey who would be happy to use the PayPie plat. New core functionality will be added to fetch journal entry and other accounting data from different ERP softwares in real time. API integration with likes of Xero, QBO, Sage, SAP, NetSuite, etc. will make real-time financial and credit risk assessment based on triple-entry blockchain immediately available worldwide. Building strong partnerships with major accounting and ERP systems is a major aim of our overall marketing strategy. For example, QuickBooks Online has a strong connection with TSheets B, and this makes their services available right inside the QBO to more than 2.3 million users with the click of a button. We can visualize that day when companies can access short-term lending or finance their invoices exactly this way by leveraging blockchain technology. PayPie will also be able to make prompt recommendations based on our ability to predict patterns from a company’s account history. We will also be able to anonymize financial data from many kinds of businesses and use that data to give small business owners or investors an idea of lending opportunities and compare it to anonymized data from other firms in their industry. Potential implications are enormous as transparency brings a whole new value to businesses, regulators, and investors. For example, if an auditing firm is looking at various companies and checking all the transactions on the blockchain to see what has happened or gone on between them, we could take that data and use data visualization tools to have a view of that segment of the business. Individual companies have a lot of liabilities to each other, and all this would be visible on the blockchain that they cannot alter. The cost and time necessary to conduct an audit on a company would also decline considerably because auditors could easily verify the most critical data behind the financial statements. Access to the PayPie plat will be free for SMEs interested in offering credit score analytics on the actual financials of their business for better access to the lending market. An excellent credit score at the PayPie plat will qualify for best deals from the invoice marketplace. PayPie will follow IFRS accounting standards so that we are independent of country-specific approaches that are usually followed by an ERP software. 3.3 Risk Assessment to the Limits of Surgical Precisions PayPie risk algorithm will score each company based on its financial and transactional history in the plat. PayPie will have access to the complete history of SMEs in their accounting solution like who are their vendors, how reliable SMEs are at making payments to their vendors, what’s the projected cash flow for the coming weeks, months and year based on the historical data, balance sheet, income statement and other data points. This makes PayPie the first to have a real business accounting plat to take advantage of blockchain technology and smart contracts to revolutionize the financial sector for companies. We believe that innovation will help millions of businesses in coming years as we fully utilize the blockchain to help solve real-world problems, like smart contracts to detect false, inflated or duplicate invoices or fake reporting. We are thus creating an efficient solution with tremendous global potential by bringing crypto to the world of decentralized accounting, in the of the PayPie plat. Big data based on real-time unique credit risk algorithm scoring would be primarily based on the live financials of a business in PayPie and will be based on more than 150 data points including below - Current Assets - Current Liabilities - Working Capital - Retained Earnings - Earnings Before Interest and Taxes - Total Liabilities - Total Assets - Gross Sales - Book Value of Equity - Payment History - Budget - Cash flow forecasting - Decentralized Trust and Transparency Rating DTTR - Social fingerprints Credit ratings would include numbers, ratios, and colors to help lenders quickly uate the risk. Other scoring and bankruptcy ulas, such as Altman Z-score used in the financial lending world or solutions like Experian, Dun Bradstreet, and publicly available XBRL data may also play a role in future as we develop an ecosystem for real-time credit scoring. 4 Problem of Liquidity Lack of positive cash flow kills 25 of SMEs out there, and it is more important than ever to keep a business cash flow positive. Unfortunately, it is one of the biggest challenges faced by small business today, and SMEs struggle to create new opportunities, implement existing plans, pay salaries, manage working capital to buy new