We enjoyed reading a very useful article on Altfi recently which highlighted the leading invoice finance platforms in Australia.
Some important differences were highlighted:
This usefully sets out some key foundations based on conventional debtor finance. During the early 1990s, 'invoice financing' or 'discounting' as described above developed into a major asset finance product for larger companies. In recent years, banks have steadily withdrawn from this segment due to the inherent risks and operational complexities.
Invoice finance is now seeing the development of a next generation product: confidential invoice trading. Over $2 billion of finance has been provided in this form in the UK alone, having started only 5 years ago.
This is a revolutionary new way of doing invoice finance, as pioneered by Marketinvoice in the UK since 2011 and adapted by InvoiceX for the Australian market since 2014.
Confidential invoice trading opens up a broad market of high quality, growing businesses who are attracted to raising flexible growth capital confidentially on attractive terms. These companies are not attracted to factoring or invoice discounting.
- Unlike factoring, our invoice trading solution is confidential. We are the only platform that offers this in Australia. We do not contact or chase the debtor for payment.
- Unlike invoice discounting, our investors own the traded invoice. This is a much better place to be from a credit risk perspective. Our investors are not materially exposed to insolvency risk from the seller. Therefore, we can offer much better terms to SMEs and much larger facilities.
We are very excited as this form of finance opens up so many growth opportunities for many of Australia's most promising companies.