Strong demand drives growth for invoice funder

by Julia Corderoy23 Nov 2015
Strong demand for quick and easy cash flow solutions by small businesses has driven significant growth for invoice funder, The Invoice Market, including strong growth through broker referrals.

In just 15 months since The Invoice Market commenced funding cash flow for Australian small businesses, it has financed over $100 million. The invoice funder is now funding up to $15 million per month.

Speaking to Australian Broker, the CEO of The Invoice Market, Angus Sedgwick, said the growth in broker referrals has also been gaining strength as brokers gain more awareness about the invoice funding market.

Sedgwick said he plans on running broker-centred training workshops throughout 2016 to further educate brokers on how cash flow financing can help their small business clients. 

“Into the new year, The Invoice Market is going to be running some workshops around the country for brokers,” Sedgwick said. 

“So for those brokers who are interested we will be running a training course where we will take them through what invoice funding is — from what the different types of invoice funding are and what different types of funding businesses can get, including overdrafts, bank loans, etc and then we will explain where invoice funding fits into the whole debt funding piece. 

“Within the invoice funding world there is full facility factoring and single invoice discounting, so we will explain what the differences are there and where it would benefit one company to use that versus another one.”

According to Sedgwick, The Invoice Market has even structured its referral fee structure in the same way lenders structure their broker commissions, to make it easier for brokers to partner with them and “build a book” with them.

“We have deliberately structured [our remuneration structure] the same way as the banks so brokers can do the same thing with us — build a book and continue to receive a renewal income as long as that seller keeps putting up invoices,” Sedgwick told Australian Broker. “We have structured it so it looks like upfront and trails and so they can build a book of business with us.”

“The Invoice Market typically receives a platform fee of 2% of the invoice value and we will pay brokers 35% of what we receive as an upfront – which is typically 70 basis points of the invoice value for the first half a million dollars’ worth of invoices. Once the client has sold more than half a million dollars’ worth of invoices to us the 70 basis points becomes 35 basis points —so then that is the trail. 

“Once the client is on-boarded they keep getting that 35 basis points for every day that client sells [invoices]. So they can build a book of business in debtor funding just like they would do with their mortgage book.”

There is no one type of small business that can benefit from invoice funding, says Sedgwick, which means brokers may have many small business clients they can help provide cash flow solutions for. 

“Any business that needs cash flow funding will benefit from invoice funding and that is typically businesses that have debtor payments terms of 30 days or more. A usual term is 30 days end of month, so if they issue the invoice on the 1st of November then they won’t get paid until the 1st of January and that is 60 days they are out. There are some brutal payment terms out there. 

“Any businesses that require cash flow funding but don't want to be locked in to a 12 or 18 month contract having to fund every invoice every time can benefit from working with us. The Invoice Market pushes the flexibility of flexible invoice funding as opposed to full facility debtor factoring,” Sedgwick told Australian Broker.
 

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