Treasury & Lending — Executive Summary

Audience: CFO, COO, platform owners
Purpose: Alignment on the multi-currency lending model, credit risk appetite, and operating procedures
Status: Concept under review — prior to implementation
Technical documentation: TREASURY.md (for the development team)

1. Why the Treasury Module Is Needed

The platform’s business model assumes that merchants take cheque batches on consignment and settle with the Issuer only after the cheques are sold — typically on a monthly basis. This means there is a funding gap of up to 30 days between the moment cheque batches are shipped to the merchant and the moment payment is received.

To keep the platform operating continuously during this period, external funding is required. The treasury module is designed to solve exactly this problem: it sources credit lines from investors and lenders and allocates them to merchant funding in line with the platform’s configured risk appetite.

Simple model:

Lenders → Credit lines → Platform → Merchant funding → Settlement → Repayment to lenders

The platform earns on the spread:

merchant fee income − interest expense on credit lines = net carry

2. Platform Lenders

The platform’s lenders may include:

• Platform owners and investors (direct loans)
• External lenders (companies, funds, individuals)
• In the future: decentralized liquidity protocols (DeFi)

Each lender may open one or more credit lines with individual terms.

Parameter	Description
Currency	USDC, USD, EUR, USDT — multi-currency support
Type	Revolving or term
Limit	Maximum amount available under the line
Interest rate	Fixed or floating (SOFR / EURIBOR + spread)
Maturity	Expiry date of the line
Collateral	Unsecured at the initial stage

Revolving Line

This is the primary type of facility. As amounts are repaid, the limit is restored and becomes available for reuse. Each individual drawdown has its own repayment term, for example 45 days. The line remains active until its expiry date or until a decision is made to close it.

3. Lender Restrictions: Eligibility Matrix

Different lenders have different levels of risk tolerance. The treasury module allows the platform to define which lenders’ funds may not be used to finance which merchants.

Examples of restrictions:

Restriction	Example
Minimum merchant credit rating	A conservative lender finances only merchants rated A or B
Instance exclusion	A lender does not want exposure to a specific market, such as a certain country
Instance exclusivity	A lender works only with a specific partner
Per-merchant limit	No more than $5,000 from a given line to a single merchant
Per-instance limit	No more than 30% of the line allocated to one instance

These rules are applied automatically whenever a funding decision is made for a cheque batch.

4. Merchant Credit Profile

Each merchant is assigned a credit profile by the platform.

Parameter	Description
Credit limit	Maximum amount of open batches at any one time
Current exposure	Amount of shipped but not yet paid batches
Credit rating	A / B / C / D — assigned manually
Settlement term	Standard 30 days, configurable
Preferred settlement currency	Currency in which the merchant settles

The credit rating affects funding eligibility. Conservative lenders may refuse to finance merchants rated C or lower. Ratings are managed manually by the finance team.

Automatic Blocking on Overdue Settlement

If a merchant fails to settle beyond the allowed threshold, 3 days by default, the platform automatically:

1. Blocks shipment of new batches to that merchant
2. Records the fact and date of the block
3. Notifies the instance administrator

Unblocking is manual only and requires administrator confirmation.

5. Aggregated Settlement Balance

The platform maintains a single liquidity pool — an aggregate of available funds across all active credit lines.

Account Structure

To manage liquidity allocation between instances, the platform uses an internal account structure:

Platform pool (all credit lines) → Instance account A / Instance account B / Reserve account

The CFO and COO may manually rebalance allocated limits across instances through the administrative interface. This allows liquidity to be managed flexibly without changing the terms of the underlying credit lines.

6. Risk Appetite and Allocation Strategy

When a cheque batch is shipped to a merchant, the system automatically selects which credit line should fund it. The decision is based on the configured allocation strategy.

Strategy	Logic	When to Use
Currency match	Fund from a line in the merchant’s settlement currency	To eliminate FX risk
Lowest cost	Use the line with the lowest interest rate	To optimize funding cost
Maturity match	Use a line whose maturity covers the merchant settlement period	To avoid maturity mismatch
Maximum availability	Use the line with the largest unused balance	To deploy liquidity quickly
Balanced	Distribute usage evenly across all lines	To diversify dependency

In addition to the selected strategy, the system applies hard risk appetite constraints:

• Maximum share of any one merchant in the total pool, for example no more than 20%
• Maximum utilization of a single credit line, for example no more than 40%
• Maximum debt-to-equity ratio
• Minimum remaining maturity required for a line to be used

7. FX Risk

The platform operates across multiple currencies. When the currency of a credit line differs from the merchant’s settlement currency, the platform takes FX risk.

Policy: FX risk is recorded explicitly and reflected in reporting. For each drawdown from a foreign-currency line, the exchange rate is fixed on the transaction date. Upon settlement, the actual profit or loss from FX differences is reflected in the carry P&L report.

At the initial stage, no hedging is planned. The recommended approach is to prioritize the currency match strategy in order to minimize open FX exposure.

8. Treasury Economics (Carry P&L)

The platform earns on the spread between merchant income and the cost of funding.

Item	Description
Income	Merchant fees (issuance, redemption, exchange)
Expense	Interest on credit lines
FX differences	Gain / loss from currency mismatch
Net carry	Income minus expense

Key performance indicators:

Metric	Meaning
Cost of funds	Annualized interest rate across the credit line portfolio
Fee yield	Percentage return generated from merchant transaction volume
Net spread	Difference between fee yield and cost of funds
Average settlement term	Average number of days from shipment to settlement
Overdue settlement ratio	Percentage of total volume that is overdue
Pool utilization	Percentage of total available limit currently used

If the interest rate on credit lines exceeds fee income, the platform effectively subsidizes operations from its own funds. This may be acceptable during the growth phase, provided the situation is tracked and controlled explicitly.

9. Risk Management

Liquidity Risk (Maturity Mismatch)

Situation: a credit line expires before the merchant settles.

Control: the system identifies and displays the amount of such “problem drawdowns” in the dashboard. If a mismatch exists, the CFO is notified.

Merchant Credit Risk

Situation: a merchant does not pay.

Control: automatic blocking of new batches upon overdue settlement; credit rating is downgraded manually; managed by the COO.

Concentration Risk

Situation: too much of the liquidity pool is concentrated in a single merchant or a single line.

Control: concentration limits defined in the risk appetite settings.

FX Risk

Situation: the exchange rate moves between drawdown and settlement.

Control: explicit accounting, reflection in carry P&L, and priority given to the currency match strategy.

10. Operational Controls

Four-Eyes Principle

The initiator of a financial operation and its approver must always be different people. The system must not allow one employee to complete the full operation cycle alone.

Operation	Initiated By	Approved By
Manual drawdown from a credit line	Finance	Another Finance team member or Administrator
Large drawdown (above threshold)	Finance / Administrator	Owner only
Closing a credit line	Finance / Administrator	Owner
Changing risk appetite	Finance / Administrator	Owner
Rebalancing internal accounts	Finance	Administrator / Owner

Velocity Limits

Limits on the volume of drawdowns from a single line per day serve as protection against mistakes and abuse. These limits are configured individually for each line.

Notifications

The system automatically notifies finance and operations teams of the following events:

Event	Recipient
Credit line expires in N days	CFO, Finance
Line utilization exceeds 80%	CFO, Finance
Line expires with outstanding debt	CFO (urgent)
Automatic drawdown executed	Finance (summary or immediate)
Large drawdown	CFO, Finance
Merchant frozen due to overdue settlement	Instance Administrator

11. Audit and Compliance

All operations are recorded in an immutable audit log, including:

• who performed the action and when
• before / after values
• IP address and confirmation of additional authentication

Financial records such as drawdowns, interest accruals, and allocations cannot be modified or deleted once created. They may only be moved to a final status, such as repaid or defaulted.

12. Implementation Phases

Phase	Scope	Priority
Phase 1	Lender registry, credit lines, eligibility matrix	P0 — foundation
Phase 2	Merchant credit profiles, allocation engine, automatic drawdown	P0 — core functionality
Phase 3	Interest accruals, carry P&L	P1
Phase 4	Settlement balance dashboard, notifications, overdue monitoring	P1
Phase 5	Permission editor by function	P2

13. Open Questions for Approval

13.1 Initial lenders
Who will be the platform’s first lenders? What terms are expected: currency, rate, limit, maturity?

13.2 Merchant credit limits
What should the standard limit be for a new merchant? Based on what criteria should it be increased? Is a multi-step approval process needed above a certain threshold?

13.3 Default allocation strategy
Which strategy should be used by default? Recommendation: currency match to minimize FX risk.

13.4 Large-operation threshold (four-eyes)
At what drawdown amount should Owner approval be required, rather than Finance approval only? The draft documentation assumes $10,000 USDC, subject to approval.

13.5 Merchant settlement currency
Which currencies will be accepted for merchant settlements? Who bears FX risk on conversion? Is multi-currency allocation required from day one, or are USDC-based lines sufficient initially?

13.6 Overdue policy: automatic vs manual control
Automatic blocking after more than 3 days overdue is assumed. Are different thresholds needed for different merchant categories? What is the resolution process after a block is triggered?

13.7 Cost of funding vs fee income
Under the current pricing model, do merchant fees cover the cost of external funding? Is financial scenario modeling required before launch?

13.8 Collateral for lenders
At the initial stage, facilities are unsecured. At what portfolio size would it make sense to move to a receivables assignment structure? This could reduce the cost of funds.