So what differentiates the new models employed by fintech startups from past “old school” facilities?
Ease and simplicity
Gone are the days of lengthy applications, complex terms and fixed term commitments - new online models feature a simple, straightforward and immediate application process, with transparent fees, terms and conditions.
A direct connection
New Invoice Discounting financiers take advantage of cloud accounting by providing a direct connection to customers’ cloud accounting to facilitate online application, credit assessment, invoice selection and ongoing facility reporting/monitoring.
Fees and Charges
New models dispense with the raft of fees and charges which are often levied by traditional financiers for dubious reasons – new financiers charge minimal, if any, fees or charges.
New financiers do not charge penalties or extra fees for early repayment - after all, why would it make sense pay a fee just to repay a loan early, if it ultimately reduces the lender’s risk?
Advance payment / rate
The Advance payment or rate refers to the amount that a financier will lend against a specific invoice. Traditional financiers often limit the advance rate to 80% of an invoice. In many instances new financiers will advance over 85%, with some advancing 100% of the invoice value.
Most importantly a customer first approach
Like other markets, traditional financiers seem to have forgotten that they are serving the customer, and not the other way around. New models reverse this relationship by offering facilities which place the needs of the customer first, appropriately balanced with their own risk and returns.