Experienced financial services professional Helen Cahill saw that SMEs were being restricted by financing barriers. Along with two like-minded colleagues, she set up an innovative financing platform to enable Irish businesses to reach their full potential. For a company like Human+Kind, the solution was a game changer.
Human+Kind began in a kitchen in Cork in 2013, where founders Jeroen Proos and René van Willigen first brewed their signature ‘family remedy’ cream.
“It was a shared passion for animals, nature and healthy living that made us want to develop a natural, vegan and cruelty-free skincare line,” explains Proos, “but we also wanted a product that is kind to humans: kind to skin, and kind to the wallet.”
By 2015, Human+Kind had extended its line of Irish-made skincare products and reached an eclectic range of customers from across the globe. Jeroen explains, “We really want to be affordable and accessible to as many people as possible.”
In 2016, they brought Jeremy Smith on board as an executive officer. Together, the Human+Kind team began to build their customer base. “We really put a lot into good, smart networking, at trade fairs and online, getting our products out there.”
The hard work paid off. With persistence and “a bit of luck”, the company has placed Human+Kind amenities in 50,000 hotel rooms, and has an annual lip balm order from Turkish Airlines.
The real break came last year, with a purchase order worth $2.2 million from a US subscription box company called FabFunFit. “They had seen some of our products and they approached us and asked us if our production capacity was big enough to do large numbers. We have always set our sights on building as a global brand so we said yes. But we didn’t actually have the capital to meet the order!” explains Jeroen.
“The problem was,” adds Jeremy, “not only did the order exceed our credit limits with our suppliers and manufacturers, it was also pushing our manufacturers to exceed their credit limits with their material suppliers. After talking to the bank, we realised there was no solution there. I even looked into whether I could swing financing it personally.”
Having exhausted these options, the team sought advice from Enterprise Ireland. “I reached out to our advisor,” says Jeremy, “and she put me in touch with someone who recommended a couple of companies that might be able to help. After talking to InvoiceFair, I very quickly realised that they could really help us, not only for this one deal but also in the long term.”
The final hurdle
“The most difficult thing in business should be winning the sales order, not financing it,” says InvoiceFair’s co-founder, Helen Cahill. She has spent her career working with SMEs in all sectors: “I saw companies blocked from expanding because they didn’t have access to progressive and relevant working capital finance solutions. At the same time, in the investment world there is a continuous search for yield, particularly returns that are not correlated to the broader market.”
With co-founders Peter Brady and Ivan Fox, Cahill set out to develop a solution. “We were all seeing what SMEs were struggling with,” says Helen, “Peter had spent much of his career in manufacturing, so he has been in the trenches with a deep understanding of the challenges associated with working capital.
“We knew the problem we needed to solve, but it was really working with SMEs that inspired us to develop solutions to their specific problems,” Helen Cahill, co-founder InvoiceFair
The resulting solution, InvoiceFair, is an online platform where SMEs with a funding need connect with a pool of institutional funders. The model is based on receivables trading. SMEs leverage their future receivables, such as invoices and purchase orders, as tradeable assets. Funding is secured on the back of these assets.
“SMEs can leverage their quality receivables when they need to release cash,” explains Cahill, “and not just at invoice stage, SMEs can do this at the very beginning of a contract”. This is known as ‘purchase order finance’, where up to 70% of the contract value is released to pay suppliers upfront and fulfil contract costs. This source of finance means that companies can tender for much larger orders. In addition, the model does not limit funding due to debtor concentration, transaction size or geography, for example country of export. The latter is of particular benefit to companies with global markets.
“In order to develop the best solution, we always meet our clients face-to-face,” says Helen. “Jeremy met with Peter, Ivan and I to discuss Human+Kind, their vision for the company and the opportunity with FabFitFun.”
The core of InvoiceFair’s work involves independently researching companies and their customers. “Our due diligence is often more thorough than a bank’s, both in terms of the SME and the funder. This ensures the integrity of the marketplace for everybody,” says Helen. Jeremy provided the purchase order and background financial information on Human+Kind, while InvoiceFair researched their US customer, FabFunFit. In this way, InvoiceFair enabled Human+Kind to leverage on the blue-chip purchase order from FabFunFit to finance the sales order. Within five days, Human+Kind had secured their funding.
InvoiceFair provides a launch pad
“This case study is what we are about,” says Helen, “connecting Human & Kind to a pool of institutional funders enabled them to leverage their high-quality purchase order to pay suppliers upfront. More importantly, it resulted in their skincare brand being in two million homes in the US. And now they have successfully scaled the business internationally, which is so exciting for them.”