Invoice Finance

Market Invoice Review

October 6, 2016

Market Invoice is a platform that offers invoice financing, they provides SMEs with cashflow. SMEs have cashflow challenges given their small size. Cashflow is all about timing the money in and money out in a firm. A supplier needs to be paid soon after stock arrives, but a client has 30,60 or 90 days to pay. This situation makes the timing of cash in and out crucial to the survival of the business this is where Invoice Finance comes in. Investors can purchase the unpaid invoice and the firm is happy to pay the interest, because they can deploy that money in the business to keep the wheel turning.

Companies can sell invoices to investors in order to have working capital sooner rather than later. Traditionally this is only available to larger firms.

SWOT Analysis.

Advantages

For SMEs: the process from online application to funds in the bank usually takes less than 4 days.
Launched in February 2011, and still going
Invoices traded is now over £25million.
Venture Capital firm Northzone provided seed money worth 5m, Paul Forster, founder of Indeed.com
Won the “Innovation of the Year” award in 2012
The interest rate for investors hovers around the 6.5% zone.
Regulated by the FCA
AutoBid tool (Aka Auto Invest)

Opportunities

Diversification is possible, the platform provides invoices finance from a variety of industries.
Possibilities of getting discounts

Disadvantages

Investors (invoice purchasers) n this case only pay one fee (“MI Servicing Fee), the amount of which is based on the fee schedule.

Total Investor Member funds represent the total funds you have on the platform. Please note that MarketInvoice does not charge you any management fees like traditional asset managers based on assets held on

MarketInvoice does not charge you any management fees like traditional asset managers based on assets held on the platform but instead only takes the MI servicing fee below based on the interest rate return made from a trade.

A simple example would be, if you invested in an invoice and your yield was 7% on the amount invested then we would take the servicing fee from that Interest. I hope that provides clarity.

Total investor Member Funds
greater than 2 million 20%
200,000 – 2,000,000 25%
less than 200,000 30%

Limited only to UK firms.
Market Invoice can default if it does not make a profit.

Threats

Firms using this platform are for some reason tight on cash. This can be both positive such as they need inventory or negative such as they need to make an interest payment and current cash flow does not allow it.
The recovery rate is stated as 88% in some places and in others 96%.
The payer can delay payment. (In which case the rate of return will be adjusted accordingly)
The payer can dispute the contract, as the supplier did not deliver as promised.
The payment might be sent to another firm. (redirection)
The payer might become insolvent or go into bankruptcy.
Invoices can be Fraudulent, although Market Invoice authenticates the directors.
Market Invoice does not have “skin in the game”, i.e. does not participate in the invoice finance.
The Sterling has lost value to other currencies, bitcoin and gold since Brexit.