Tighter oversight to rein in risks in Singapore’s invoice finance market

The vulnerabilities and risks associated with an industry promising quick returns to growth-hungry SMEs were laid bare after an unravelling $6.9 million sham at at Singapore crowdfunding site.

Obtaining financing is the fourth biggest growth challenge which startups face and numerous financing methods have surfaced to meet the capital needs of growing businesses. Invoice financing allows businesses to secure cash by leveraging against the value of payments they are owed from their customers for an agreed return to investors, providing them with the capital needed to grow.

“Businesses with tight cash flows due to large receivables or long credit terms from customers usually utilise this product. Historic or existing cash balances do not matter as much as repayments are secured via payment on invoice,” said Pawel Kuznicki, CEO of peer-to-peer and invoice financing platform Capital Match.

The recent fraud that occured calls attention to the relatively unregulated nature of the industry and crowdfunding platforms are doing their part to increase risk management capabilities.

Click here to find out more on the views of other industry experts and how crowdfunding platforms are managing risks.


Invoice Finance in UK: The business lifeline

Cash flow is an issue for many small businesses in the UK which has led to the growth of a booming invoice finance market. 

“The proportion of small firms seeking external finance that apply for invoice finance has risen to around one in three this quarter – up from one in seven at this time two years ago,” says Federation of Small Businesses chairman Mike Cherry.

This article provides you with more insights on the rise and importance of invoice financing in the UK industry, where small and medium sized businesses make up 99.9% of all private sector firms.

The future of invoice financing may be influenced by the growing demand of borrowers. Industry experts say that rates are becoming less important to SME borrowers, who are placing more emphasis on flexibility and long term borrower-lender partnerships.

The potential for the P2P invoice finance sector is enormous with many firms already surpassing their own funding goals. The demand for invoice finance is going to stay and P2P lenders are a crucial part of the solution.

Visit the full report here for more.