You are forgetting the fact that changing the beneficiary name is part of the Smart Contract. If it’s a brand new customer, risk would be shown as high. Nick has mentioned that if it’s a repeat customer with long history and business has good financial health, it will improve the risk score. Further they mentioned that they will do KYC on all SMEs looking for liquidity. All this would be on top of the standard financial process that would be in place to prevent loan defaults or steps to take to aid debt recovery. In fact there are debt collection mechanisms that are well established in offline financial industry. You lend money only to businesses who have sound financial health and they just need it for short period to manage their cash flow. Other companies can't even check the double invoicing issue becuase invoice entry is manual so anyone can enter it.
The risk score shouldn't have anything to do with the SME selling the invoice since they are not the one to settle it, so doing KYC on the SME is useless too.
The right thing to do is to do risk score and KYC on the entity listed in the invoice, but this will introduce more complication into the business model.
If there is default, how exactly will PayPie recover it?
Will it be under PayPie's responsibility, or others?
If it is others, then the cost incurred in recovery will be borne by others, i.e. the token holders.
Of course there are debt collection mechanisms in offline industry, which is exactly why I said the recovery involves persistent threats; debt collecting agencies keep calling up the debtors with threats of legal actions. In fact if the debtors know their rights, they can refuse to pay altogether and if the debt collecting agency wants to pursue the matter legally, it would be costly to the agency.
How can you even be sure a business has sound financial health? Please refer to Enron.
