A new online invoice finance solution has appeared on the UK’s alternative finance scene. Companies struggling with cash flows, while waiting for invoices to be paid, now have a new option by the name of Funding Invoice.
Founded by Aamar Aslam, a recent Warwick economics graduate, the recently launched platform matches small businesses with a network of potential investors, who can purchase invoices and provide up to 90 per cent of their value immediately. The rest of the money will be provided only when invoices have been paid and investors are charged a small fee whenever that happens. The platform is keen on highlighting that only investors are charged, while SMEs are not.
The functionality of the platform is rather straightforward and may be summarised in three main steps. Firstly, small business owners need to complete an online application form, providing some basic information about their companies. If a business passes the platform’s due diligence checks then it may upload its invoices for sale. Those invoices will then be verified and made available for investors. The advance is said to be available to users within a working day.
I caught up with young Aamar Aslam to learn more about the competitive landscape of the UK financing industry and about the future of its business. The idea for launching a new platform followed on from Aamar’s first-hand experience of the difficulties that small companies still have in accessing finance. Indeed, before launching Funding Invoice, he set up a chauffeured car service to take VIP clients from large companies to and from the airport. During this time, he realized that many chauffeurs were not getting paid for 60 days or more – an unsustainable state of play. This experience served as the impetus for Funding Invoice.
The company is the third online invoice financing platform on the UK stage and it will compete with two well-established platforms in MarketInvoice and Platform Black. Founded in 2011, MarketInvoice has already helped hundreds of growing companies overcome their fluctuating cashflows, with over £450m funded to date. Platform Black has traded 2,333 individual invoices since inception, worth £105,550,850.93, according to its website.
The young entrepreneur is not concerned by the sizeable head start that these competitors enjoy, arguing that those two companies combined had less than a 0.1% share of last year's broader invoice finance market. Aamar’s mission is to raise the profile of the online segment of the invoice finance market, owing to the improved customer experience and transparency that he believes it offers.
“Firstly, before competing I see collaboration with these companies to raise awareness of the industry simply because invoice trading, what we do, makes up such a tiny proportion of the total invoice finance market at the moment.”
Aamar was keen also to highlight the differences between the Funding Invoice offering and existing outfits:
“There are a few things that we do differently. Firstly, we don't charge SMEs to use the service at all, the only fee they pay is to the investors who fund their invoices. Secondly, we've built what is the simplest platform on the market. Uploading an invoice takes literally 5 seconds and rather than the customer inputting the invoice data manually, we have developed some software which extracts the invoice data directly onto our platform - every little helps!”
Switching to the future of the sector, Aamar somewhat paradoxically believes that the sector will face some consolidation in the near future. However, he has a positive outlook for the short-medium term.
“We only launched a few months ago and we're on track to have funded £1m by the end of this calendar year. If we can continue to take this growth forward into the next couple of years, we'd be able to really cement ourselves at the forefront of the fintech movement. Over the next three years, we're aiming to have more than our invoice finance product, our ultimate aim is to become a one stop P2P shop for the UK's small businesses - a real alternative to the traditional banking system, whatever your needs may be.”
Funding Invoice will soon be appearing on AltFi Funding