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Great idea and a much needed alternative to traditional finance.
I think accountants here can play an even greater role with finance of this type. Certainly if I was the lender and looking for strong returns in the medium - high risk category I would welcome an accountant monitoring the company proactively. By which I mean Cashflow forecasting, general liquidity monitoring, debtor chasing etc etc I would likely contribute to the cost of that also (as the lender) because that helps lower my risk and boost my return. One of the many ways I see the client/accountant/funder super trio working to the benefit of all.
@flofunder - let's talk
A very interesting concept. I would be interested to see how the business model works. However I would be very wary of my clients lending money to other clients with me in the middle. There seems to be a very high risk that when a debt goes bad, the finger gets pointed at the accountant.
I have had a run through the product with an online demo a while ago and I want to see what the finished product is like before commenting. The concept is great. I think most practices will have good clients in need of funds and cash rich clients looking for better returns.
@Jon - I think you mis-understood the intention of the client bit. Whilst I can't speak for flo my interpretation was that 'your/our' clients would generally borrow from 'funders' which are not clients even if their identity was available in the funding chain (which generally it is not). Of course they potentially could be clients if they were HNW individuals / flush companies so your scenario is not impossible but I am not sure to what extent that would be visible anyway as a lot of other similar platforms act as the middle man so the end lender / funder are not directly aware of each other so to speak which is how I am assuming flo would do it....however I don't know for sure as not talked to them yet but would assume it works like any bank. My deposits are my next door neighbours car loan (assuming we are at the same bank) to some degree.
this is what the website says -
"The FloFunder Platform rapidly matches buyers with sellers within their common accountancy practice"
Seems to support Jon's view
What I see happening is a client saying to the accountant "I am looking to fund X Ltd's invoice and as you also act for X Ltd what do you think?" There would be an expectation that the accountant would have their finger on X Ltd's pulse and be able to say whether it is a good bet. (i) you say yes, and then you risk a PI claim (ii) you say no, and X Ltd gets upset (iii) you say nothing and they go ahead and you end up with the complaint 'why didn't you tell us'. You can't win.
It looks like a very interesting concept, but I would rather have clients look for funding from the world at large, not from my pool of clients. It's too close to home.