Xero partners with MarketInvoice

Alternative finance platform MarketInvoice has partnered up with Xero, promising to give users access to finance for individual invoices within minutes.

Earlier this week alternative lenders also got some welcome news that the government would be introducing new legislation forcing high street banks to refer rejected small businesses to alternative finance providers.

Launched in 2011, MarketInvoice (MI) acts as a go-between for high net worth investors - including the UK government - and businesses who need funding to apply and be approved for it directly through their software. They can then sell long-dated, individual invoices to a network of global investors.

Everything can be done on the same day, from signing up to selling invoices to drawing down. When you're already registered, and particularly through Xero, which autopopulates entries and invoices, its even quicker - giving access to the finance "in three clicks", it promises. 

Once approved  (usually it takes 20 minutes, according to the firm - but can take up to 24 hours) businesses can access the MI platform directly from Xero and sell selected invoices in "just three clicks". Funding will be advanced within a couple of hours.

It's been a big year for the peer-to-peer funding platform, whose head of partnership development Ari Last said it broke European records in July with its biggest ever month of £25.6m being traded through its platform. 

So far, its had £220m raised since 2011, but £100m of that has been over the last 10 months. 

Last said the company was formed in response to the 'banking entrenchment', and lack of UK small-to-medium-sized business funding. But nowadays, ironically, there have never been more credible funding sources available to UK businesses, he added. 

As such it is targeting accountants as being "key" to educating their clients as to the forms of alternative finances out there and against the scepticism that exists in some accountants and businesses around it. 

It aims to provide finance to businesses that have invoices from large corporate suppliers - or rather suppliers that will pay but often take quite a long time in doing so.

Last added that the third reason they were formed was to provide an alternative to a full, year-round invoice finance facility, something he says may not be suited to all kinds businesses due to it sometimes being only certain times of the year and certain debtors that cause the cashflow issues.

“The idea they can chose particular invoices and debtors to raise finance against turns invoice finance into a much more mainstream solution," he said. 

The product is essentially on online technology platform. It goes between investors - these are high net worth individuals, private equity, even the UK government, who buy the invoices. 

It’s open to any kind of business to use, from turnover anywhere from £100,000 to £100m but its “sweet spot” is £500,000 to £10m turnover.

MI said it has a transparent price plan, and that the business’s funding is presented up front before they trade. They pay two fees on the finance:

  1. The MI processing fee, which is 1.5% against face value of the invoice they fund. That fee doesn’t change depending on whether it’s a 30 or 90 day invoice
  2. The second is to investors, which is on average 1% per 30 days

Last said that Xero was the only accounting platform it had partnered up with, but was examining future integrations. He added that they had already seen a good uptake in the usage of the platform through the software. 

MI has been working with some accounting firms, such as Alexander Rosse, which has raised £500,000 for a tech client's eight invoices in six months on the platform.

Comments
BobEdwardsLandmark's picture

Funding for small business

BobEdwardsLandmark | | Permalink

Great to see alternative funding for smaller businesses. Impressed with the Xero link.