Best Payables Supplier Financing Solution Platform Black

Global Finance magazine recently anointed Platform Black as the Best Payables Supplier Financing solution. In their review, they commented,

UK-based Platform Black, a relatively new entrant into the supply chain finance market, leverages the latest Cloud-based technologies to enable suppliers to more easily sell their invoices or accounts receivable to a multitude of funders. Although exchanges for selling receivables is not a new concept, such solutions make it easier for suppliers to upload invoices to access a wide range of funders, including nonbanks, which is increasingly important in light of the impact regulations like Basel III will have on banks’ ability to fund supply chain finance programs. Unlike some bank-led solutions, Platform Black offers funding to cover 100% of the invoice. The advantage for suppliers is that they can access financing more easily and quickly rather than having to meet strict criteria put in place by a buyer-led, bank-supported SCF program.

First, the category is confusing. Embedded in Platform Black’s solution are both spot auctions for single and multiple batch invoices for sellers and unsecured payable finance backed by promissory notes. Spot auctions are an online invoice auction market designed to be a single invoice, non credit enhanced exchange. Sellers of invoices set the parameters (minimums, advance rates, etc.) and Investors, known as Buyers (including banks, hedge funds, asset-based lenders, and family offices) compete in real time to purchase them. Spot auctions are adhoc funding, short and simple.

So how did Platform Black win this award? I mean since June 2012, PB has processed about £90M via 2,000 auctions. That is a piece of sand on the beach when it comes to receivables outstanding.

Was it their auction technology? Was it their differences with existing invoice auction platforms? There are certainly some minor differences with how the platform operates vis a vis other auction platforms like MarketInvoice or The Receivables Exchange. Perhaps it was their product offering. Here even GF magazine got it wrong. With their SME Invoice Trading Product, the supplier can go to 90% of the face value of the invoice (not 100%) and there is recourse on the supplier if the buyer does not pay.

These auction markets are great for small guys to have an alternative liquidity source, but face big challenges. High customer acquisition costs make this difficult to scale. Focusing on mid market companies is challenging, as they desire facilities versus spot trading. Fraud is always an issue. The Receivables Exchange small business platform had to be shuttered partly due to invoice inflation, so this is an area where investing in proper due diligence is both paramount and costly (is this starting to look more like factoring?)

I guess my readers can figure out who is best, but I think Global Finance can do better. Perhaps start with more defined categories.


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First Voice

  1. Mitesh Patel:

    This style of financing will always be rampant with fraud when done to fly by night standards. Seems to me that Global Finance Magazine have completely overlooked innovators and disrupters such as Tungsten Corporation. Their newly acquired bank is now lending against receivables submitted via their secure and compliant e-invoicing network. The bank is FCA regulated and checks are done to banking standards. Unlike other offerings the green button will remain permanently on. This should scale up into the billions of £’s €’s & $’s over the next 12 months and inject much needed working capital to business’s enabling them to take on much larger projects and boost the economy world over.

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