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June 23, 2011updated 12 Apr 2017 4:13pm

Online market for invoice finance eyes assets

An online marketplace for small businesses to sell their invoices to institutional investors has said that it may expand into fixed-asset finance.

By Nick Huber

An online market for small businesses to sell their invoices to institutional investors has said that it may expand into fixed-asset finance.

Marketinvoice, which says that it is the UK’s first online marketplace for invoice finance, believes that small and medium-sized enterprises (SMEs) have become more interested in invoice finance amid claims of a continued scarcity in bank loans for small businesses.

“Businesses will take our product because it is very flexible,” a Marketinvoice spokesman told Leasing Life. Typical business customers have a turnover of less than £10m a year and work in the service industry, such as web site design companies or consultancies, he said.

Under Marketinvoice’s service, institutional investors compete in a real-time auction which determines how much of an invoice’s value they will advance — up to 90 percent –— and the fee they’ll charge, normally between 1 percent and 2.5 percent.

Marketinvoice, which has about 20 registered businesses registered with its site, charges a 0.5 percent fee of the invoice face value.

Cash is advanced to the business immediately and when the business’s trade customer eventually pays the full invoice, the business gets the remainder of the original invoice value back, less the small discount fee.

The Marketinvoice spokesman said that although it was focusing on invoice finance, it may diversify into other types of finance, including finance secured against equipment and fixed assets.

Invoice finance grew strongly in the first quarter of this year, according to figures from the Asset Based Finance Association (ABFA).

Total advances from ABFA members in the first quarter grew 9 percent year-on-year. Finance through leasing and hire purchase grew 8 percent and wider bank lending actually contracted by 2.5 percent in the same period, ABFA said.

 

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