C2FO brings their Auction Market to the UK

Private company C2FO (formerly Pollenware) was founded in 2008 and is based in suburban Kansas City. The company enables Corporates to conduct a web-based marketplace where companies and their suppliers conduct live auctions aimed at optimizing the cash flow process. C2FO has been described as a private NASDAQ for cash flow between buyers and their suppliers.

C2FO is an online, early payment system that hosts market auctions, typically weekly, where suppliers make dynamic bids for accelerated payment of their approved invoices by discounting those invoices in real-time events.  It is a supplier initiated request.   Suppliers log into the (C2FO) Supplier Portal to view their approved invoices and to select their invoices for payment acceleration, offer a discount, and therefore control the timing and the value.

Recently, C2FO partnered with Fifth Third Bank to resell their solution. See C2FO teams with Fifth Third Bank.  Now KPMG has partnered to introduce C2FO to UK businesses.  Simon Collins, KPMG Chairman in the UK commented,

“The traditional bank lending model has changed, perhaps forever, as a result of the 2008 crash. We know from some of our smaller and medium-sized clients that they continue to struggle to borrow from the banking high-street. However, myriad alternative sources of finance, such as asset-based lenders and crowd-sourcing platforms, are filling the gap. C2FO will provide a much-needed non-bank source of working capital finance to suppliers and will help many small firms stabilise their supply chains. I believe this will prove a really interesting addition to the increasingly diverse mix of funding available to businesses, particularly SMEs.”

Corporates I spoke to like using C2FO because it is bank agnostic and they do not need to involve their banking group. They also have the flexibility to dial the weekly auction up or down based on their cash position.

Our research team believes C2FO is an interesting auction market for corporates looking to provide another liquidity option to their supply base but would note a few cautions:

  • So far, C2FO does not invite third parties to auctions – they are limited by the free cash flow of Corporate.  In my discussions with corporates, many reluctantly assume the role of in-house bank to their supply base and would prefer third party alternatives.
  • The program can distort Cost of Goods Sold if these auctions grow to significant numbers. Analysts would care how the financial statements are impacted. Hopefully with KPMGs move into this space, we can get more clarity in the role of discounts, rebates, etc. particularly as third party funders move to fill gaps in capacity for corporates who would like to pay vendors, but are short on cash for the week.
  • So far, the programs are mostly North American, although Toys R Us is using them for their Chinese suppliers and we now have the U.K. program.
  • The company is still relatively small. 

While C2FO has big corporates using the system (eg. Costco), KPMG’s entry may well increase visibility.

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