invoice financing and invoice factoring

Time to ask where's the money to back our exporters - invoice trading solves the cashflow mismatch

 

Another week, another story about transitioning from the mining boom. Australian service businesses have a great deal to offer overseas companies. We see it every day. But without the finance to grow, how can you do it? Has anyone asked that question in Canberra?

Our broken Basel 2-3-4 system of regulatory capital makes our banks focus on residential mortgages, not lending to businesses. Time to change that. Now!

"Sheep, iron mine and Sydney Opera House," writes Yongyu Ma, a student, on the online forum Quora in response to the question "What do Chinese people think of Australia?"

Prime Minister Malcolm Turnbull this week headed a 1000-strong delegation of business people to China in an attempt to convince them we have more to offer.

Events and banquets were held across 12 Chinese cities, with Austrade officials acting as cupids, of sorts, setting up speed dating sessions for Australian businesses to tout the full diversity of our economic wares to Chinese buyers.

Australia can be as nimble, agile, innovative and excited as we like, but just because we’re good at providing services, doesn’t mean we’ll necessarily sell lots of them.



 

KPMG: invoice trading is the fastest growing alternative finance model in Asia-Pacific, ex-China

KPMG: invoice trading is the fastest growing alternative finance model in Asia-Pacific, ex-China

This report is based on a survey of over 500 alternative finance platforms in 17 Asia Pacific countries and regions, capturing an estimated 70 percent of the visible market. As the first comprehensive study of the Asia-Pacific online alternative finance market, this research contributes to the growing body of data supporting the region’s potential.

16 March 2016

Why is invoice trading the smart way to grow and who offers it in Australia?

Great to see real progress this year in raising awareness of invoice trading. We operate the only confidential invoice trading platform in Australia. Our growing business customers love using our service and our investors are happy. That makes us happy too!

Spotlight On The Top 5 Australian Invoice Financing Platforms
By Guglielmo de Stefano on 18th February 2016
 

In a recent article, AltFi investigated what’s happening in the Alternative Finance Market in Australia. What emerged is that the AltFi revolution seems to have started approximately when Matt Symons and Greg Symons founded SocietyOne in 2012, the first fully compliant peer-to-peer lending business in the country.

That research focused mainly on peer-to-peer lending and equity crowdfunding. Although these two subsectors are key pillars of the broader alternative finance spectrum, we believe that invoice financing also deserves the same attention.

First and foremost, it’s crucial to state the difference between invoice financing and invoice factoring, as they aren’t the same thing at all.

The former refers to borrowing money against businesses’ outstanding accounts receivables. An example helps to clarify the point. A lender gives entrepreneurs cash today in relation to the value of the company’s accounts receivables – money owed to the firm, which clients will pay in the future (hopefully). Once the clients pay up, entrepreneurs then repay the lender the amount loaned plus fees and interest.

The latter is a bit different. Indeed, in this case the lender “buys” the accounts receivables entrepreneurs are owed and takes over collecting from the clients. With invoice factoring, the lender will pay the business owner a percentage of the total outstanding invoice amount, then takes responsibility for collecting the full amount. Once they collect the full amount, they’ll advance entrepreneurs the difference, keeping a percentage for their services.

The main difference between these two forms of financing is obvious. In the first case, the business owner is still responsible for collecting outstanding money owed by his/her clients. In the second case, clients will deal with the factoring company to make their payment, not the business owner.

In Australia, from what we can establish, the top 5 Australian invoice financing/factoring platforms are Waddle, Marketlend, Timelio, FundX and InvoiceX.

Waddle: Founded in July 2015 by Leigh Dunsford and Simon Creighton – owners of invoice factoring company Trade Advance – Waddle is an invoice financing platform, which has provided about 20 Australian SMEs with approximately $1 million in financing to date. In a recent interview, Leigh was keen to highlight that Waddle is no ordinary invoice factoring company. The platform offers a solution similar to factoring in some ways, but very different in others. As with factoring, Waddle provides funding against small businesses’ outstanding invoices. Unlike factoring solutions, businesses’ clients are never contacted or hassled by Waddle and entrepreneurs are able to skip on the paperwork headaches that historically plague the factoring process. 

Marketlend: Founded in December 2014 by Leo Tyndall and Paul Roffey, Marketlend was conceived as a business peer-to-peer lender, offering loans to businesses in the form of working capital, traditional business loans and commercial property finance. Its offering includes three products: a debtor finance product, an invoice financing solution and a trade finance service. In the case of invoice financing, loans are secured by a personal property interest over the borrower’s company and the platform owns the supplies as it pays for them; in the case of the debtor finance offering, they are secured against the borrower’s accounts receivable. To find out more about Marketlend click here.

FundX: Based in Sydney, FundX was founded by David Jackson – former Australian small business builder and investor. According to him, the primary aim of the company is to connect businesses with investors who can fund their cash flows. Users are provided rapid access to funds based on the value of their outstanding invoices. FundX uses big data, machine learning and predictive algorithms to analyse risk and authorise invoice funding “with the push of a button, in less than a minute”. 

InvoiceX: Founded by Dermot Crean and Steve Yannarakis, the company is strongly placed to help small and medium enterprises (regardless of their business sector) to deal with working capital pressures. Its primary product – the Match Maker Trading Platform – rapidly matches investors with businesses, optimising the deal for both parties. InvoiceX assures the total absence of set-up fees and a straightforward application process. The company aims to provide a cash advance – up to 85% of the Face Value of an invoice – within 24 hours.

Timelio: Founded in 2014, Timelio – formerly known as InvoiceBid – enables businesses to raise short-term finance by selling their unpaid invoices directly to a network of investors. The platform requires investors to fund their accounts with a minimum of $25k. Before being approved to sell invoices on the platform, all invoice sellers undergo a rigorous credit assessment. The platform states that third party analytics and searches might be used to further support the internal assessment. Before being made available for investment, each invoice and debtor will be verified and authenticated. Timelio has been recently awarded the “Game Changer of the Year Award” sponsored by Visa and the “Overall Award for Outstanding Excellence” sponsored by Optus at the OPTUS My Business Awards in Sydney. 

If you want to know more about the alternative finance space in Australasia, be sure to book your tickets for the AltFi Australasia Summit 2016 before they sell out.

SME finance in Australia is changing for the better thanks to P2P/marketplace lending

Oz P2P Lender Releases Loan Book

By Guglielmo de Stefano on 2nd February 2016
 

Invoice trading platform InvoiceX publishes its loan book as part of its plan to boost transparency.

Australian online invoice trading platform InvoiceX today announced the publication of its loan book, containing tons of data on more than $6.5 million of invoice trades from November 20th 2014 – when the platform launched – to 31 December 2015. According to the data, the company is on track to trade over $50 million worth of invoices in 2016.

Founded by Dermot Crean and Steve Yannarakis, the company is strongly placed to help small and medium enterprises (regardless of their business sector) to deal with working capital pressures. Its primary product – the Match Maker Trading Platform – rapidly matches investors with businesses, optimising the deal for both parties. InvoiceX assures the total absence of set-up fees and a straightforward application process. The company aims to provide a cash advance – up to 85% of the Face Value of an invoice – within 24 hours.

Dermot Crean, co-founder and director of InvoiceX, commented:

“Greater transparency is key to taking P2P lending mainstream, both for businesses and consumer loans. It is our hope that release of this data will prompt other P2P lenders to take the same action. We want to ensure that all business owners in Australia who are eager to grow have access to transparent and fair finance which puts the rights of borrowers at the centre of the lending process.”

Since inception, InvoiceX has facilitated 201 trades for SMEs with an average trade face value of $33,098, an average discount fee of 1.2 per cent per calendar month and an average settlement period of 35 days. The platform is keen on highlighting the differences between its business model and a normal factoring provider. Traditional factoring involves long lock-in periods, much higher costs and the losing of control of sales ledgers and collections. Conversely, InvoiceX’s product is totally confidential, with no lock-ins and a good deal of flexibility.

According to Dermot, the release of this data is indicative of a maturing P2P lending market in Australia. He said:

“The public release of this lending data will allow businesses to make easy comparisons between P2P lenders, and also directly with traditional finance options such as term loans and mortgages. […] Greater transparency is key to taking P2P lending mainstream, both for businesses and consumer loans. It is our hope that release of this data will prompt other P2P lenders to take the same action.”

It’s widely acknowledged that transparency is a key pillar of the Alternative Finance Space – essential to ensuring the sustainable growth of the asset class and to demonstrating that alternative finance platforms are behaving responsibly.

InvoiceX claims to be the first P2P Australasian platform to publish its loan book. “It's great to be the first to do this ever in Australian SME finance,” said Dermot. RateSetter Australia, following in the footsteps of its UK-based progenitor, uploaded its complete loan book online last October – although this resource is updated on a quarterly basis. On a global scale, many players have already disclosed their data, including the likes of ZopaFunding CircleRateSetter and MarketInvoice in the UK.

Aside from increasing the public’s opinion of the sector, data is critical also from a practical perspective, allowing for the construction of indices, such as the The Liberum AltFi Returns Index (LARI), which will likely come to form an essential component in the maturation of the sector.

AltFi Data today added an Australasian section to its Resources page, providing a link to the InvoiceX loan book, which is accessible here. We suspect that InvoiceX may have company in the Australasian section before long.

An Australian First : the first SME loan book ever to be disclosed

In an industry first, InvoiceX has today published its full loan book as part of its push for greater transparency in Australian SME finance.

The loan book contains anonymised data on more than $6.5 million of invoice trades from the platform’s launch on 20 November 2014 to 31 December 2015.

During this period, InvoiceX facilitated 201 trades for SMEs with an average trade face value of $33,098, weighted average discount fee of 1.17% per calendar month and average settlement period of 35 days. Larger trade values of close to $200,000 in the last three months of 2015 saw average trade face value increase to $44,133.

We want to ensure that all business owners in Australia who are eager to grow have access to transparent and fair finance which puts the rights of borrowers at the centre of the lending process.

We have set ourselves ambitious targets to help Australian businesses grow.  Our institutional-grade platform is ready to service the needs of our customers on a low cost basis. As a result, we are confident that we can provide the best deal for growth capital in Australia.

The data is available publicly for anyone to download and will be updated regularly.

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