invoice discounting

Swiss Invoice Finance Marketplace Advanon Hit by Fraud Case

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Swiss invoice finance platform Advanon has to deal with a large fraud case. A client allegedly made up invoices for non-existing transactions and submitted forged invoices, bank records and emails. These invoices were then financed on the Advanon platform by 78 private investors. The fraud continued undiscovered for about a year racking up a total damage of 2.4 million CHF (approx 2.1M EUR).

2.4M CHF may not sound a very large absolute sum for a p2p lending company, but Advanon so far had financed invoices of only about 60M CHF in 2017, so the potential loss equals roughly 4% of the total yearly volume. And the exposure per investor is unusually high for a p2p lending marketplace as the affected investors could face a 30K CHF loss on average. Media speculation is that they might face a total loss. Advanon has about 3,000 registered investors, the majority from Switzerland with a few German investors. Advanon offers interest rates between 6-20%.

“We founded Advanon with the mission to help SMEs meet the ever-increasing payment deadlines and thus have a positive impact on the SME economy and its growth. It is frustrating and intolerable that this was being exploited by fraudsters with great criminal energy. We are mobilising all our efforts to fight for our investors and to recover the money they have invested.” Several lawyers and the entire management are working on the case. “We will adjust our strategic direction,” said Advanon CEO Lojacono. As a consequence, only institutional investors will soon be admitted to the platform. Advanon has always emphasized that investing in a high-risk asset class like factoring should only be considered as part of a diversified portfolio.

The case is now investigated by the public prosecution body.

Last November Advanon announced a pilot project for an invoice financing cooperation with insurance company AXA Wintherthur.

 

Fellow Finance Adds Invoice Financing

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Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.

Fellow Finance says the opening of the new invoice finance service by Fellow Finance ensures that small and medium-sized companies will receive a new flexible funding channel alongside traditional business loans. In Fellow Finance a company only uploads its invoice receivables in to the service and receives a funding offer immediately. When the funding offer has been accepted, the company receives the money immediately against the invoice receivable. This will make the pay of working capital needs easier for companies suffering from long invoicing periods up to 60 days.

“Financing a trade receivable is one of the easiest and most reasonable ways for companies to acquire working capital. By financing an invoice, a firm immediately receives its money, which accelerates money circulation and supports the growth of the business. The invoice finance service by Fellow Finance is technologically a forerunner compared to traditional services and operators in Europe, “says Jouni Hintikka, CEO of Fellow Finance.

With new invoice finance functionality investors have now the opportunity to invest in companies’ short-term invoices. Basically, this means that a company offers its invoice to the marketplace of Fellow Finance to be funded by investors. Fellow Finance always does a credit rating for the invoice entered for financing based on the receiver and payer of the invoice contract. In addition, the credit risk is not transferred to the investors, but it is retained by the company that finances the invoice. The annual interest rates of invoice financing for investors are on average between 6-10%.

In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.

Investly Launches Invoice Finance for UK SMEs; Raised 600K from Speedinvest

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Tallinn based p2p lending marketplace Investly, which recently launched an invoice finance product in Estonia announced the launch of the service for UK SMEs. The invoice finance option will give UK businesses almost instant access to much needed working capital to aid growth.

The launch comes after a successful European launch of the platform in Estonia 18 months ago, and a subsequent investment of 600,000 Euro from Venture Capital group, SpeedInvest.

Until now, invoice finance options – whether through traditional channels or via other peer-to-peer platforms – have been complex and laden with fees and charges.

Investly says it has simplified the product so that, once credit checks have been cleared, SMEs can sell invoices to investors within two days. And therefore assign the money to aid growth, enabling them to be the best they can possibly be without the cash flow worries. Initially, the invoice finance product will be available to any UK SME who passes the platforms sign-up criteria, which includes credit checks and confirming their identity. Further safeguards are put in place such as directors’ checks and potential guarantee.

Ruth Chamberlain, Investly’s UK Country Manager, said: “Long payment terms are crippling for UK SMEs. They are dependent on cash to sustain and grow their business, but as they invest in products and people, they may not get money on work completed a month or even 120 days after issuing their invoice. This is putting many businesses at risk – especially smaller ones and those that depend on payments from one or two key customers.” Continue reading →

My First Bids in Invoice Finance Loans

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Marketinvoice and Platform Black have offered the possiblity to invest in invoice finance / invoice discounting loans for some time in the UK. However these were not an option for me due to requirements (minimum invest and/or UK bank account).

investly-invoiceTherefore I made my first bid on a loan of this type on Investly on Dec. 31st. It was the first invoice discounting loan the Investly marketplace launched, making this asset class available to investors in the European Union from bid amounts as low as 10 Euro. Investly ran the offer in a three day auction period, with 15% maximum interest. Even though the bidding period was over New Year, the demand was high and several investors were outbidded during the underbidding auction (screenshot right shows status on first day of auction).
Registered investors are able to see the underlying invoice that is financed.

The loan is for less than a month, due to be repaid on January 19th.

Today Mintos launched a cooperation with DEBIFO which as a originator will provide invoice finance loans on the Mintos platform. That enabled me to make my second bid in invoice financing. The loans listed today at the Mintos p2p lending marketplace carry interest rates from 11.2% to 13.8% and are for a loan term of less than a month.

‘For most of the small and medium enterprises in the Baltics, receiving client payments in time is critical in order to ensure continuous operations. While many of these companies have large, reliable and stable business customers, they typically set payment terms of up to 60 days or more, which makes it hard for small businesses to survive’, says the peer-to-peer lending platform Mintos CEO Martins Sulte, who welcomed the cooperation with DEBIFO.

Mintos management forecasts high investor interest in this investment product. Martins Sulte continued by saying ‘Most of these outstanding invoices are from stable, large companies, which means that the risk is relatively low. The other aspect that investors will like are the short repayment terms’.