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The Comitation BusinessThe new and ground-breaking solution from TREEEC for business transactions and financing – based on Smart Contracts

TREEEC is not only new and better money, it also offers new and ground-breaking solutions embedded in it. An example of this is the Comitation Business we have developed, which aims to simplify economic cooperation that transcends regions and countries reducing and even eliminating the dependency on bank loans and, in general, on the need for FIAT money. As commonly known, suppliers of raw materials and merchandise often require advance payment from their business customers for cross-border transactions or handle this via letters of credit. Without this, the supplier usually must procure export insurance to limit his risk, which always requires liquidity or proof of creditworthiness. As a result, companies in many countries, including the EU and the NAFTA or ASEAN region, are precluded from getting raw materials for further processing or merchandise for making business. But production and trade for companies in all parts of the world could, in fact, be very easy. The Comitation by TREEEC makes it possible.

TREEEC MONEY (TRM) is an important thing and as alternative currency indispensable for the system. But without T:XCHANGE, the settlement platform, it would be just another boilerplate alternative money, as convincing as it may be. With T:XCHANGE and using TREEEC MONEY (TRM) outstanding services are provided for companies that join TREEEC as a Business Partner forming the T:BIZCOM community. Let’s take a look at that.

The new form of business transaction and financing for production and trade

In addition to corporate financing in the form of interest-free and perpetual equity financing, TREEEC has a business development and financing model for production and goods transactions that can be used regionally, nationally, and internationally between companies of all types and credit ratings. For companies in the same country among each other and also with suppliers and customers abroad. At TREEEC, this model is called Comitation or Comitation Business. The term, which exists only with TREEEC, goes back to the Latin word comitatus and means accompaniment. It is therefore an accompanying business.

In the Comitation you find elements of the consignment (delivery of goods or materials, in which the supplier remains owner until it is removed from the consignment stock), the forfaiting (purchase of receivables waiving a recourse against the seller in case of default of the debtor), the commission business (business in own name on behalf of others) and, in the case of the production of goods, the contract production (directly customer-oriented contract production). However, elements of procurement optimisation, the hedging of the payment risk and the drop-shipping (third-party business) are also included. Depending on the requirements, partner are able to use the entire range of Comitation, or claim only modular parts as they see fit.

Smart contracts form the basis for the transaction

The contract is concluded in the form of a Smart Contract between the contracting parties, including the accompanying TREEEC trading house T:INTERTRADE. For example, material suppliers, forwarding agents, transport insurers, or warehouse keepers can also be included. For this purpose, an input mask is provided in connection with T:XCHANGE and the account of the business partner, in which the required data are entered and a Smart Contract is automatically created on the basis of the advanced TREEEC blockchain. A distinctive feature is the connection of the Smart Contract with the same number of unique units of TREEEC MONEY (TRM), as contractors take part in the business. The Smart Contract is thus issued and registered at least twice, with the minimum number of two contracting parties, each connected to a unit of TREEEC MONEY (TRM). This provides additional security and protection against manipulation. Yet noted, the units of TREEEC MONEY (TRM) carrying the Smart Contract are independent from the units used for the payments. The Smart Contract is then automatically sent to all involved contractors, each of whom must confirm it via his T:ACCOUNT, the complex account connected with T:XCHANGE. In order for the contract to be finally put into effect, T:INTERTRADE must give the final clearance and thus set the business in motion.

All this is done through T:XCHANGE and in a secure automated process with registration of the smart contract in the peer-to-peer network at all TRUST HOUSES and at all DATA CITADELS. The contract data is fully registered by the DATA CITADELS as a blockchain, while the singularised contractual components are registered between two of several contractual partners registered and managed by the TRUST HOUSES. The singularisation is done because it makes little sense for a contractor, who is only involved in one part of the business (for example as a component supplier), to be informed about the entire contract and all terms. If he has also done his part, he receives payment regardless of whether the entire business has been finalised.

In the course of the transaction, the performance and the contract handling are validated at each individual step by T:INTERTRADE and the validity and billing status are verified by the DATA CITADELS in feedback with the TRUST HOUSES. Only when this is done payments will be triggered. In case of changes or delays, the Smart Contract can also be adjusted together with the affected contract partners and updated in the amended form by adding supplementary parts to the contract. It is then registered in the network and applied for verification and validation in the amended and supplemented form. The updating of a Smart Contract allows easy adaptation to actual business processes in conjunction with our advanced blockchain.

The course of the Comitation Business with a practical example

Suppose a Turkish furniture wholesaler gets an order from a hotel in Antalya to supply 300 wardrobes for refitting the rooms. He gets no credit and does not have the money to pay in advance or to provide a letter of credit. The customer who has the money for the purchase does not want to pay before the goods are delivered. The risk is too great for export insurance, so the manufacturer and supplier in Belgium would not receive any such insurance to hedge most of the possible payment default. Moreover, he also has no capital and does not receive any credit at all from his bank. The business cannot take place. Anyone who believes that this is an exceptional case is mistaken. This is quite usual. And Turkey is still a country, which is economically pretty normal, even in the current situation. How about doing business with a company in Ukraine or India? Even more difficult or quite impossible. For TREEEC this does not differ from the case with Turkey. the Belgian furniture manufacturer and Turkish wholesaler only need to be Business Partner at TREEEC to make this business possible.

The furniture manufacturer has concluded the business with the end customer for a reasonable sales price with the wholesaler through the intervention of the Turkish branch of T:INTERTRADE. T:INTERTRADE handles not only the overall processing and validation of the individual steps, but also the delivery guarantee. It is the relevant trading and settlement area in connection with T:XCHANGE, which has a national branch, usually in the form of a joint venture company with TREEEC’s national system partner in each country in which TREEEC is present.

The Belgian manufacturer, in consultation with T:INTERTRADE, orders the raw material for the production, i.e. wood, fittings, etc. TREEEC may also use purchase advantages because T:INTERTRADE for other business partners also buys from this raw materials supplier. As a rule, the supplier will also be a member of TREEEC. The payment is made by direct credit on the account of the raw material supplier. T:INTERTRADE becomes the owner of the goods, delivered to a consignment stock of the furniture manufacturer. The producer removes the material from this stock and processes it into wardrobes. This can be done in his own name or in the form of contract production for T:INTERTRADE. One by one, he puts the finished wardrobes back into the consignment stock and immediately receives the difference between his selling price and the raw material or his fee for the commissioned production.

The wardrobes are delivered in part or all on behalf of T:INTERTRADE to Turkey, usually also with a logistics company affiliated as Business Partner. Either the delivery takes place in the consignment stock at the wholesaler or directly to the end customer. The wholesaler places the invoice to the end customer, but assigns this claim directly to T:INTERTRADE. He immediately receives the corresponding credit of his trading margin, i.e. the difference between the agreed intermediate trading price – free consignment stock or free end customer – and the final price on his T:ACCOUNT. In addition, there is the sales tax, provided it is not mutually offset. Everything else is done by T:INTERTRADE. It is also quite possible that the hotel, if it is also in the system, does not pay the wardrobes directly, but claims an interest-free financing by TREEEC. This in turn takes the form of participation financing or, for example, is a further supplementary business in connection with a contract with a tour operator.

The immediate valorisation in TREEEC MONEY

This is by no means a barter transaction or a form of bartering, but a transaction in which goods are traded within the economic system and externally at marketable prices. Even in the case of additional compensation transactions (a product is not paid exclusively with money, but paid as a countertrade wholly or partly with another good or service) an immediate valorisation takes place. This means the conversion into money and payment, always in the form of TREEEC MONEY (TRM), which immediately becomes available.

This money can be used free of all restrictions on payments inside and outside the system. If FIAT money is needed, or if payments are to be made in FIAT money, TREEEC MONEY (TRM) can also be exchanged for US-Dollars, Euros, and other currencies via T:XCHANGE and credited to a linked conventional FIAT money account, or, for smaller amounts, cashed out. TREEEC will provide liquidity in FIAT currencies as long as that is required – usually in each country where TREEEC is represented.

Comprehensive and cost-effective services are making many businesses possible

TREEEC receives a pre-determined share of the contribution margin in case of a Comitation transaction, which covers all costs of TREEEC and T:INTERTRADE. This share is substantially lower than the costs that would be incurred by interest on credit financing, export insurance, forfaiting, or factoring. The decisive factor is that TREEEC and the form of the Comitation not only make the business much more cost-effective for all concerned, but also make it possible at all.

The explanation here has been simplified for clarity. A clear contract and form set on the required legal basis for domestic and foreign transactions is provided by TREEEC as well as clear procedures and rules, which are developed by TREEEC for practical handling. The consideration of the tax conditions of the respective countries is also part of this. For every Business Partner, his T:ACCOUNT has access to all the necessary management software, and also interfaces for accounting and account management in FIAT money.

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