Four alternative finance options for debtor financing and cash flow

by | Jan 3, 2020 | 0 comments

The traditional finance system is getting a run for its money as more SMEs look to borrow from specialist non-bank lenders, finds the Scottish Pacific Growth Index released September 2016. The poll of 1200 Australian small and medium enterprises reports a 30 percent increase in interest from 2015, with nearly one in five owners planning to fund their growth and short term funding needs using alternative financing. Faster loan approval times and the simplicity of the application process are appealing to business owners. However, business owners should still assess important details such as interest rates and security required. Caveat Emptor.

Here are four financing companies challenging the traditional finance market:

1. Fifo Capital

Fifo’s finance options target businesses looking to plug an immediate cash flow gap with invoice factoring and/or business loans.

In single factor invoicing, your business can sell one or more invoices to Fifo who will fund up to 80 percent of the invoice value within 24 hours or less of completing an application. Once your customer settles the invoice with Fifo, Fifo pays you the remaining 20 percent, minus a fee.

For businesses needing a short term unsecured business loan (terms between three and 12 months), applications for Fifo’s Smart Loan are assessed against a borrower’s list of aged debtors and creditors plus recent financial reports. Repayment periods, frequency and amounts are determined on a case-by-case basis.

Who’s using Fifo

  • Seasonal businesses that need to sustain cash flow during peak season.
  • Businesses with a $1 million to $10 million turnover.
  • Start-up or high growth businesses that can’t access traditional lending facilities.
  • Businesses with funding needs of $5,000 to $500,000.

Check out the Fifo Capital website

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2. Marketlend

Marketlend’s peer-to-peer lending platform provides two invoice-related products for borrowers: debtor financing and supply chain finance.

For debtor financing, Marketlend will advance you up to 90 percent of the invoice you have issued to your credit customer, charging an interest rate per month. The outstanding accounts receivables you choose to finance are the main security you need to secure the line of credit, which can be issued within hours. Either you keep control of collecting payment from your customer or Marketlend will buy your sales invoice and take control of that asset. When the invoice is fully paid by your customer, Marketlend credits you the reserve 10%.

For supply chain finance, Marketlend will pay your supplier directly, giving you up to 90 days credit to repay your loan. Any sales invoices you create in 90 days brings down your payable amount to Marketlend. Effectively, you get to take ownership of stock and sell it, before a payable is due.

Who’s using Marketlend

  • Manufacturers and wholesalers with national and international suppliers and customers.
  • High turnover businesses up to $10 million.
  • Businesses that have an online and a retail presence.
  • Businesses looking to close a loan in 3-5 days, or within 12 hours for smaller loans.

Check out Marketlend’s explainer video and website

3. Thincats

Thincats offers a peer-to-business marketplace lending platform that connects wholesale investors who want to make secured loans to SME borrowers with long-term plans for growth.

Eligible loan opportunities are listed on the online platform, with investors lending fractional amounts directly to corporate borrowers.

Loans between $50,000 and $500,000 are secured against business cash flows and other assessed security. Loans can be repaid on 2-5 year terms with a competitively priced monthly loan administration fee, with no penalties for early pay back.

Who’s using Thincats

  • Cash flow positive companies that require loans for growth: working capital, finance for equipment, infrastructure, construction, business acquisition. SMEs that require loans from $50,000 to $500,000.
  • Experienced business operators who can demonstrate the ability to service the debt. Start-up companies with industry experienced directors who can evidence a strong asset position.

Check out Thincat’s explainer video and website

4. Waddle

Waddle allows businesses to access cash using open sales invoices as loan collateral. After linking your accounting software (MYOB, Xero, Quickbooks) with Waddle’s app, within seconds Waddle will offer you a credit limit (up to $800K).

You’re free to select which debtors to finance, with accounts receivable management remaining a function within your business—Waddle’s service is confidential. There are no fixed repayments as future customer payments pay down your loan balance. An annual interest rate is charged only on funds drawn; there are no lock in contracts. Choose to draw down funds from your approved line of credit as you need it and funds are in your account within 24 hours.

Who’s using Waddle

  • Any business who sells on credit terms, e.g. wholesalers, manufacturers, labour hire (recruitment), marketing/media services.
  • Companies with a minimum $1M annual turnover (or $50K in Accounts Receivable).
  • Businesses looking to enhance their existing debtor management tools and practices.

Check out Waddle’s explainer video and website

Only ezyCollect gives you an end-to-end solution to revolutionise team efficiency and customer experience from invoice-to-payment.

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