One of the most annoying parts of being in business is often waiting to get paid. Though you’ve completed the work, your client has stringent payment terms which mean that you could be waiting months to be paid. Multiply this through dozens or even hundreds of suppliers and employees and you’ve got a cash flow nightmare!
Luckily, this is where Funding Invoice steps in. This is a company that will take your invoices, pay you your cash up front – and then when you finally do get paid, you pay a small fee – removing all of the hassle and worry. To find out more, we spoke to CEO Aamar Aslam.
What does Funding Invoice do, and how does it work?
Funding Invoice is an innovative fintech start-up which provides an alternative, flexible method of raising finance for businesses through invoice trading. Using our in-house technology, we connect businesses with a network of professional investors who advance funds against unpaid invoices which gives our business customers access to the working capital that they need to grow!
How did you come up with the idea? Was there a moment of inspiration?
When I started a private chauffeur business at university, I wasn’t aware of the 60 day payment terms that I would face and my business suffered with cashflow problems as a result. I was only 18 years old at the time and was turned away by the banks for a relatively large funding requirement, so I ended up looking at alternatives and found a number of businesses which are now Funding Invoice’s competitors. I instead used the services of some private investors who loaned me some funds until my invoices got paid. There were still a few improvements to be made to the market and so I launched Funding Invoice!
What’s your personal backstory? How did you become an entrepreneur?
My first business was in events, where we organised parties, charity events and talent shows for up to 1000 people. During my time at university, I then co-founded a chauffeur and limo service. As mentioned, we suffered with cashflow problems which led to the creation of Funding Invoice. With my university graduation approaching, I had to make a decision between taking a graduate job offer in a city investment bank and launching Funding Invoice. Fortunately, joined by Kautham, my university roommate, I chose the latter and haven’t looked back since!
What’s the story of Funding Invoice until now? How large is the company?
Funding Invoice is a spinout company of the University of Warwick. In addition to a small sum invested by the university, we received seed funding from a number of angel investors, as well as some personal investment from the founders: myself and Kautham Haran which allowed us to soft-launch in September 2015. We actually started trading properly in January 2016. Having started with two people in a room at university, we now employ six members of staff in our London offices and have provided over £12m worth of finance to the UK’s SMEs.
What’s the business model?
Funding Invoice’s trading platform can be used by any business that passes our due diligence tests, from start-ups to companies with a multi-million pound turnover. Our only requirements are that a business must be a limited company with the majority of revenue derived from B2B sales..
For the investor side of the business, we only work with high net-worth, sophisticated and institutional investors. There is no minimum amount that investors are required to invest, and investors can fund as little as 1% of an invoice if desired.
Is Funding Invoice analogous to a bookmaker? Do you have to essentially place bets on whether debtors will pay up?
I think that if we were placing bets, we’d find it pretty difficult to find investors! To date, every invoice verified by Funding Invoice has been fully funded from our large pool of professional investors and we have a default rate of 0%. We verify every invoice uploaded onto our platform and only deal with customers who are owed funds from investment-grade debtors, invoicing for completed goods and services. Our revenue is also back-ended in that we profit when the invoice is repaid and, as such, we are fully aligned with our investors in ensuring invoices are repaid.
What’s next for the business? Is the intention to grow independently, or do you hope to be acquired? Will you be looking for more funding?
At this stage, we’re not thinking about being acquired – we simply want to grow Funding Invoice into a sustainable, profitable business after a profitable first year. Our long-run goal is to become a one-stop-shop for business finance whereby we can match lenders directly with borrowers achieving optimal outcomes for all parties in the process. For the time being, however, we recognise that this is only our second year and we’ve come a long way since our university bedrooms. We want to perfect our invoice finance product and really deliver some value to the market before branching into other types of finance.