SMEs typically have limited cash reserves and as a result may, from time to time, struggle with cashflow pressures. These can be exacerbated if payment of large or critical invoices is slow and that, in turn, can stifle reinvestment and curtail their growth.
It’s a problem that prompted Ian Duffy to establish fintech company Accelerated Payments in 2017, with the aim of addressing the protracted payment cycles he saw choking small businesses.
“I saw at first hand the problems caused for SMEs that have to wait for key invoices to be paid.” Ian Duffy, CEO Accelerated Payments
“I witnessed a company that had invoiced a buyer for $1.5m having to wait 60–90 days for payment. When the cheque arrived the bank said it would take six weeks to cash and it would not advance any money against it. I thought that situation was crazy because it was basically an IOU from a multi-national company,” says Duffy.
To meet the needs of businesses in similar circumstances, the Dublin-based company developed an innovative, cloud-based, invoice financing platform that is enabling SMEs to leap cashflow hurdles by offering quick and easy access to advance cash on an invoice-by-invoice basis.
A different way of looking at risk
Although invoice financing has been around for hundreds of years, Accelerated Payments offers a distinctive solution that combines flexibility, ease of use, and a focus on the credit worthiness of the SMEs’ customers rather than of the SMEs.
“SMEs can struggle to get invoice financing for a number of reasons. If they only have one customer, the banks consider that a concentration risk. If it’s an international transaction or if they are considered to be undercapitalized, that can go against them. What Accelerated Payments does is look at the balance sheet of the SME’s customer and assess their risk, rather than look at the SME’s,” explains Duffy.
Flexibility is also central to the company’s offering, with SMEs able to choose how many and which invoices they use Accelerated Payments for. This gives them access to funds when they need it without having to finance an ongoing credit line.
“Using our online platform, our clients can click on an invoice that has been approved by their buyer and instantly get 80% of the value the same or next day. Importantly, we don’t look for any personal guarantees or collateral, and there’s no complicated fees. It’s a really simple process,” says Duffy.
Underpinning small business growth
The type of business that has benefitted from the Accelerated Payments’ solution is typically small, export driven with high growth potential. One such business is XinaBox, a provider of clip-together computing components.
“Most customers take 60 days to pay, so that’s a major handbrake on growth. Accelerated Payments’ invoice financing let us grow faster: we’ve doubled headcount and gone from having one global-distributor customer to three in just three years,” says XinaBox co-founder Daniel Berman.
The challenges of COVID and Brexit
Despite the impact that COVID has had on the economy, Accelerated Payments has continued to grow, providing all important support to SMEs that are seeking to maximise their working capital position.
Brexit is a longer term challenge. “Economies don’t like hindrances and inefficiencies and we haven’t seen the full effect of Brexit yet. But I believe the market always adapts so we need to remain optimistic in the face of the obvious challenges.”
“Some of our customers are beginning to look to new markets outside the UK and we’re keen to support them to finance those transactions.” says Duffy
To better help SMEs deal with cashflow pressures in the aftermath of COVID and Brexit, Accelerated Payments has recently begun a collaboration with invoice finance company Optimum Finance. By working together, the two companies can offer more working capital to SMEs and provide best-in-class funding solutions.
Having accessed Enterprise Ireland supports at start-up stage, and more recently to support its growth, Accelerated Payments now employs 30 staff across Dublin, London and Toronto. Plans are underway to expand the London office and to set up offices in the US.
The profile of the company’s funding is also international, largely denominated in global currencies. Nearly two thirds of its loan funding is currently in US dollars, reflecting the number of its clients that are billing customers in the US.
With the ambitious goal of growing its funding book to €100m by the end of 2021, one particular focus for the company will be partnering with banks.
“Over the next few years, I believe that SME funding is going to evolve. Firstly, COVID has driven a lot of business online and it’s going to stay there. Also banks may well change their focus and look to fintechs to take the lead in providing the smaller loans that will get SMEs up and running again.
“We’ll be seeking opportunities to partner with banks in this area. So I’m very optimistic about the next two to three years; it’s an exciting space to be in.”