Peer-to-peer invoice finance - a waste of time?

[bowcot84]

A simple question. Are the existing methods of invoice finance working for business owners?

The reason for my question? I have web development company. I think there's a gap in the market for a peer-to-peer invoice finance website, but before putting something together, want to find out if I'd be wasting my time!

My assumptions are this, and I'm hope the huge knowledge base here can correct me if I'm wrong...

1) Currently, invoice factoring/discounting generally requires a commitment ... there are few options for companies experiencing temporary cashflow issues.

2) Short term bank loans are a real hassle.

3) Achieving 80-90% of the invoice value would be attractive, especially as the pain of chasing the money would be taken away from the supplier.

4) Having a third party chase suppliers's invoice would be ok.

5) Being ultimately responsible for repaying the money would be ok for businesses, if for whatever reason the end customer doesn't pay.

Are these thoughts correct?

Or, would I be wasting my time putting a site together, where investors should be able to get a good return, and businesses can quickly realise some cash.

 

[businessfunding]

It already exists - check out marketinvoice and Platform black.

That isn't to say there is no room for competition, but I would make sure that you are completely aware of the potential pitfalls of invoice finance before you pitch in.

 

[bowcot84]

It already exists - check out marketinvoice and Platform black.

That isn't to say there is no room for competition, but I would make sure that you are completely aware of the potential pitfalls of invoice finance before you pitch in.

Thanks, yes I've seen these, both aimed largely at high-net worth/institutional investors and 4-5 figures invoices.

In the former case, leaving the burden for chasing with the business.

So agreed, there is space in the market. What do you see as the key pitfalls (am working with a DCA, so leaving collection issues aside)?

 

[businessfunding]

Not having been involved in the investment side (other than as an investor in a loan site) I imagine that your biggest challenge will be encouraging investors; presumably you will be looking for long-term commitment to a client arrangement rather than purchase of individual invoices?

Jo public is relatively happy with loans - I personally believe the equity models will struggle - but getting them to invest in invoice finance which can be highly contractual will be problematic.

I should also add that invoice finance is by a big margin the most active area of business finance with lots of willing lenders.