They say the whole is greater than the sum of the parts.
I tripped over an opportunity that proved the worth of that saying.
It happened around ten years ago when I was working as a chartered accountant with Deloitte and EY, dealing with SMEs in the UK.
One of their perennial headaches was slow payment of invoices and I was surprised to find how badly they were served by the UK banks in getting access to short term loans to smooth their cash flow.
As an expat Australian I researched the situation “down under” and found that if the UK was bad, Australia was a great deal worse.
In the UK invoice financing was used to cover some 16 per cent of the short term loan market, while the Australian equivalent was only around four per cent.
The financing system in the UK was pretty slow, thanks mostly to the banks’ rigid systems, but it was better than anything we had here.
In response, UK SMEs began bypassing the banks and adopting invoice financing through fintechs on a massive scale. They needed money on their terms and often in real time to keep up with the pace of their business.
Banks were (and continue) shying away from adopting technology to enhance the loan experience.
That’s despite the fact that technology has brought a raft of improvements to other areas of global money markets. Automation and integration enabled by technology continues to drive efficiency. You’re probably beneficiaries of these innovations through the payments you make every day, your bank account and your home loan.
Sadly, the same can’t be said about business lending and, in particular, invoice financing.
In 2017, I came home and created Grapple.
Now Australia is a nation of small businesses (with around 2.4 million SMEs) and sadly we’re also some of the slowest payers of invoices in the world.
How bad? Finance company MarketInvoice recently reported that the average delay in paying invoices was 26.4 days overdue, on top of the usual 30 day terms.
Grapple continues to harness technology to make huge improvements in how short term financing is done. Tech is at the very core of what we do. Put simply, we build tech solutions specifically for Aussie SMEs.
We’ve been serving their needs for a while now and they’ve been telling us they want to spend less time on administration and more time running their business. Seems pretty reasonable.
So instead of herding SMEs into existing protocols, we’re using technology to innovate and automate a lot of the tasks that slow them down. One of the main reasons that traditional lenders stay away from invoice financing is because they don’t have the systems to analyse and manage the specific risks of this type of lending. Our lendtech solutions provide preventative risk analysis, risk management controls, account management dashboards, reporting and ongoing due diligence to effectively manage the risks of invoice financing and finally serve Australian SMEs that have been starved of funding for decades. Our client dashboards put business owners in control giving them the intelligence they need in real time.
For us, automation is everything and we do it better than anyone in the market. Time is money after all, just ask a business owner looking for funding.
I don’t want to diss the banks entirely but the reality is that they are hesitant and slow in dealing with clients for whom delay can mean commercial death.
When it comes to invoice financing, one minute the banks are in and the next they’re out.
They’re out because Aussie SMEs are demanding a service that the banks eventually realise they can’t provide. And if they can, they can’t give their solutions the attention they need to keep pace with the SMEs they’re trying to serve.
One approach the banks are turning to is partnership. They’re increasingly becoming allies of new FinTech market entrants as opposed to competitors.
The dialogue between companies like Grapple and larger incumbents continues as we collectively strive to provide a better service.
For us, we make a point of knowing the client’s specific needs and are nimble enough to be able to provide bespoke solutions. The same can’t be said for most providers in Australia
Gone are the days when even innovators built end-to-end solutions that own the entire process of anything. This includes invoice financing.
We don’t believe we need to build a palace when just a small place will do.
To use another analogy, people build kingdoms to own everything. In our world that’s the entire business process.
Empires on the other hand merely need their constituent parts to talk to each other. This is what we focus our time and energy on.
We know Aussie SMEs don’t want to have to start again every time they onboard new technology. Build and rebuild their kingdoms so to speak.
So we build the technology to resolve the most relevant parts of the process for them and those parts need to work with what they’re already using. Grapple’s technology plugs into accounting software such as MYOB and XERO while also allowing for bespoke integration.
Grapple has now funded in excess of 90,000 invoices for SMEs here in Australia.
Grapple is the most tech advanced, fastest and reliable invoice financing solution in the market. Our Aussie lendtech helps SMEs manage their cashflow better than anyone. That helps them maintain growth.
As far as supporting Aussie businesses goes, we’re doing our bit.