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.
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“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.
