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Xero web finance effort gathers steam

Xero web finance effort gathers steam

7th Apr 2017
Editor in Chief (interim) AccountingWEB
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Fintech - online financial technology - continues to gather pace within accountancy as alternative finance providers court practitioners and their cloud accounting platforms.

Over the past year or so, AccountingWEB has picked up stories about fintech companies targeting the accountancy market, including international payments platforms such as MidPoint and Payoneer, the FloFunder start-up and the recent online finance collaboration between FreeAgent and Royal Bank of Scotland.

In recent weeks, more contenders have thrown their hat into the ring led by Xero, which announced integrations with Market Invoice, Iwoca and DueCourse. Xero already has similar arrangements in place in its home market of New Zealand with Fuelled, Capify and Moula in Australia and six finance providers in the US.

MarketInvoice has been part of the Xero community since 2011 and says it has lent £1.1bn against 70,000 invoices in that period. The latest announcement confirms it as one of the founding members of Xero’s “curated” marketplace for business finance providers.

According to Xero UK managing director Gary Turner, the initiative is all part of the company’s financial web initiative to give small businesses and their advisors easier access to the funds and services they need to grow. Linking directly to the accounting data makes for quicker risk assessments and loan agreements.

“The philosophy is simple,” said Turner. “Better accounting data leads to better decisions and easier access to capital needed by so many small businesses.”

Iwoca is a newer player, having entered the accountancy ecosystem in January 2017. Described by its head of accountancy relationships as “a tech company at heart” that is looking to streamline the credit process, it has access to a £56m balance sheet of venture capital to support a growing pool of short-term business loans.

The company provides “seamless credit agreements” at rates of between 2%-6% per month based on the business’s profile.

At a QuickBooks event in March Richard Sutton said he had recruited 10 accounting partners who were now referring clients for loans. He would like to bring more on board but said there was still some ambivalence in the market.

“A lot of accountants are worried by the fintech boom. By linking to the cloud they can offer more services to clients, but some are finding it hard to keep up,” Sutton said. But the profession should wake up to convenience of online finance: “For a traditional bank loan, it can take accountants up to a week to get the documents together. We can be done in minutes.”

DueCourse is a short-term invoice finance provider that aims to help businesses cover cash flow blips. Once an invoice is issued, they can draw on the funds from the online financier rather than having to wait for the payment to come back. The fees are based on a daily rate for the amount outstanding; a fee of £30 for a £500 advance over 60 days is cited on its website.

Replies (6)

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By Michaelfking
08th Apr 2017 12:40

This is an area that is demanding attention and accountancy practices can and should create their own eco-system that marries together their own client base of funders and sellers without providing advice or recommendation, as described by FloFunder.

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By ireallyshouldknowthisbut
10th Apr 2017 09:55

John- do us a favour, just call it "FACTORING" and we will know what you mean.

Nice to see the mainline banks being challenged on their phenomenal costs for this but with "great rates" with an
APR of between 24 and 72% it remains bottom of the pile for credit unless you are about to go bust.

Proper cashflow cycle management is what most business with "cashflow" (usually disguised profit issues) need, not factoring.

Thanks (3)
Replying to ireallyshouldknowthisbut:
By Lesh
14th Apr 2017 00:55

I thought this might be useful as well until I saw the interest rates. I've used factoring / invoice discounting for a number of clients which has its place, especially with fast growing low margin businesses that don't have access to bricks and mortar security. However this looks like a very expensive way of raising funds.

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By bduncan
13th Apr 2017 10:12

Surely this article is just to give aweb affiliate fees.

Thanks (2)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Apr 2017 17:38

Sorry bduncan, but AccountingWEB is not funded by affiliation fees. We are very open that the (free) community and information services we provide for accountants are funded in the main by advertisers who want to be part of the community too.

We do mention Xero, who do advertise with us on occasion, but the article mentions similar moves from FreeAgent.

Those companies are deeply involved in this market, because they're a gateway to both business borrowers and accountant advisers. Given the number of new players piling into this sector, we certainly think we should be keeping an eye on it.

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By AndrewV12
15th Jun 2017 11:58

I am not very technical, so may the best cloud accounting performer win.

I think similar to MTD many other providers will throw there hat in the ring.

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