Islamic Receivable Finance
Islamic Receivable Finance (IRF), known as MURABAHA derivative against account receivables, is a financial instrument designed to provide working capital finance to customer via commodity transactions while prohibiting the payment or receipt of interest (RIBA) under Sharia compliant guiding principles and guided by Sharia scholars.
IRF is a program anchored by Supplier that would like to finance under Islamic Ruling. With the Cost-Plus Model, Suppliers can finance against receivables optionally confirmed by Buyers and backed by commodity transaction (purchase then sale of commodify involving commodity Brokers).
a) Supplier uploads invoice
b) Optionally, Buyer confirms invoice
2. Supplier requests discount
a) Bank purchases commodity from Broker 1
b) Bank resells the commodity to Broker 2
c) Bank finances Supplier via FinShare
a) Supplier repays finance, or
b) Buyer pays invoice