Few Lift Kimono to Show Real Data in Alternative Business Finance

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Trying to determine just how much alternative business finance is occurring in the form of payable and receivable solutions versus mainstream lending is not a straightforward task. As we mentioned in a previous post, for the majority of alternative finance B2B providers,  information on size, volumes, etc. is kept private, no different than trying to find the payment terms and commercial agreements between a Bechtel and a Sunoco or IBM and one of its engineering suppliers.  That data is just not public.

If you look at a few objective measures like

  • assets transferred to third parties (and not self-funded by companies) and or
  • invoices financed by early pay solutions (either self-funded or third party),

we can attempt to see the size of some payable- and receivable-based solutions. Here are some providers with some data, if provided:

 Alternative B2B Finance – Payables Based

  1. PrimeRevenue — has processed $120 Billion in invoices annually and has growing customer base of 20,000 in over 70 countries supporting 30 currencies.  Actual invoices financed is not disclosed.
  2. C2FO — To date, C2FO has delivered more than $15 billion in working capital to businesses world-wide via their platform. What we don’t know is how much of that was early pay versus ran through their platform. It reported Q1 2015 working capital flows of $2,856MM compared to $734MM in Q1 2014.
  3. GT Nexus (now part of Infor) — Undisclosed. GT Nexus has never released public figures on transaction volume financed by early pay or purchase order finance
  4. Oriban – Currently has around 35 programs running, including Fortune 1000 clients such as AutoZone, General Mills, Osram (a division of Siemens), and Siemens, but again no figures released.

Alternative B2B Finance – Receivables Based 

  1. MarketInvoice — Trades about $20 million invoices a month with a 15.7% delinquency rate
  2. Platform Black — A little more than £100 million over three years
  3. Receivables Exchange – Last I heard, it was doing about $200 million per month but has not updated its table on its web site for some time
  4. Tungsten Network — has  238 suppliers registered to use Tungsten Early Payment with 89 live who have financed £62 million of invoices.
  5. PayPal –Back in 2013, PayPal conducted a pilot working capital program for its merchants. The pilot offered 90,000 of the company’s merchants the option of borrowing as much as 8% of their annual PayPal volume up to a maximum of $20,000. Today, PayPal Working Capital is extending short-term loans totaling more than $100 million per month, or $3 million per day, to a mix of sellers on eBay Inc. and standalone small- to medium-sized merchants, of $3M day or close to $1bn over 2 years.
    Quickbooks (part of Intuit)-faciltated $165M to small businesses
  6. Small business marketplace lenders like Lending Club do not break out their small business portfolios

Outside of Receivables Exchange, this is mostly small business.

As you can see, the receivable side is much smaller in the alternative business finance than working with large buyers and pumping their payable volume through to be early paid. Buyer-approved supply chain finance by far injects the most capital in the supply chain out of the early pay techniques, but even here, there is success for some and challenges for others. And to date this has been the domain of the near-investment-grade or investment-grade companies, but that is changing.

If I am wrong on the numbers above, please contact me and I would be happy to correct: dgustin [at] tradefinancingmatters [dot] com

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