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MarketFinance eases SME furlough strain with Furlough Advance

MarketFinance unveiled Furlough Advance, based on its invoice finance service, offering an invoice cashflow solution to SMEs waiting for furlough funds from CJRS claims.

28th Apr 2020
Staff Writer AccountingWEB
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Despite HMRC’s CJRS claims portal opening last week, with the first claims being paid today (28 April), many SMEs are already in danger of collapsing before they get access to funding. UK SMEs are on the verge of paying out the second round of salaries to the eight million furloughed workers through the Coronavirus Job Retention Scheme (CJRS), and still, only the first few SMEs are on the verge of receiving funds.

To bridge the gap until CJRS funds are received from HMRC, MarketFinance has repurposed its Invoice Finance service to create Furlough Advance, which authorises credit facilities for claims on HMRC in order to aid the cashflow of SMEs. Currently, around £80bn moves through UK invoice finance products every year.

“With April's payday looming, it is essential that [HMRC] payments are made as soon as possible. Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and the survival of these businesses,” said MarketFinance CEO Anil Stocker.

Invoice Finance

In line with other invoice finance offerings, MarketFinance offers the majority invoice payments to businesses within 48 hours for a fee, taken from the client’s sales ledger, preventing the cashflow issues involved in waiting 30+ days for invoice payments.

Responding to the strain on SMEs waiting for CJRS rebates, MarketFinance adapted its Invoice Finance service to provide funding against HMRC payroll rebates. Where the service advanced money to businesses waiting to paid, MarketFinance intends to offer the same finance service to provide SMEs waiting on rebates with immediate funding.

CJRS funding advance

Initially, MarketFinance will be offering up to £150,000 in invoice financing to businesses waiting for CJRS rebates from HMRC.

In a recent fintech webinar considering how to get quick funding struggling SMEs, Capitalise CEO Paul Surtees pointed out that invoice finance “is probably going to be the easiest asset to fund” SME’s through the cashflow gap.  

“By the time we get to the end of May, and few invoices start flowing, this is where businesses are really going to start to feel the squeeze,” said Surtees.

However, “invoice finance is not a lifeboat” as it is not borrowing money – it’s just speeding it up, added Optimum Finance CEO Richard Pepler. “So it just delays the inevitable.” And when businesses come out of these times, “invoice finance will help speed up the cashflow for the businesses that are doing well – and it should only be used by businesses doing well”.

“Business as usual”

The key for fintechs offering invoice finance like MarketFinance, Capitalise, and Optimum Finance in this period “is ensuring that we are happy with the creditworthiness of the customers,” said Pepler.

As the onus to pay lenders back falls on the customer, the client seeking invoice finance is not in questions. However, assessing customer creditworthiness is more problematic in the current climate. 

“But as long as we're in good assessment and good data on the customers,” said Pepler, “then it's business as usual actually at the moment for invoice financing. I think it's business as usual for our sector more than probably other lending sectors.”

Funding from fintechs such as MarketFinance may be crucial in the upcoming days, particularly as “it is unknown if HMRC will be able to provide these funds on time,” claimed Alexander Rosse MD Rashesh Joshi.

Joshi emphasised that business owners have received less than £2bn from the CBILS scheme so far, and “are likely to be out of pocket by £20b for days by HMRC, which is inevitably leading to massive cash challenges.”

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