Bendigo and Adelaide Bank has offloaded a $50 million small business loan book funded off customer invoices to Timelio, and will now partner with the Goldman Sachs-backed fintech.
The deal doubles the size of Melbourne-based Timelio’s loan book to $100 million, and it expects further growth from referrals by Bendigo. Timelio’s technology assesses invoices for fraud and credit quality of debtors, allowing customers to draw down short-term loans before funds from their own customers are received.
Charlotte Petris, co-founder of Timelio: “It gives us credibility that a large bank is saying it trusts us.” Josh Robenstone
Goldman Sachs provided a $270 million facility last October, allowing Timelio to compete more aggressively with other players in the emerging area including ASX-listed Earlypay, MoneyTech and more established specialist lenders such as Octet and Scottish Pacific.
Timelio has attracted a 150 per cent increase in funding volumes in the past year, including an 80 per cent jump since the Goldman Sachs funding came through. The investment bank is taking a close interest in Timelio’s risk models, operations and governance as it explores opportunities in the niche space.
Under the referral deal Bendigo will maintain business banking relationships with customers referred to Timelio.
It comes after a detailed process at Bendigo to find the right partner. Bendigo has to hold relatively high levels of regulatory capital when invoices are used as security for business loans, so it became attractive for the regional bank to take them off its balance sheet.
“This is a great opportunity for us to scale. It gives us credibility that a large bank is saying it trusts us with its customers and is keen to partner,” said Timelio CEO Charlotte Petris.
Bendigo Bank, which reports its half-year results on Monday next week, announced last week it was combining parts of its business bank, part of a simplification process of which this deal is part.
In its consumer bank, Bendigo has backed fast-growing neobank Up and is funding mortgages assessed by Tic:Toc and using its loan assessment technology.
Bendigo and Adelaide Bank head of specialist solutions Brian Buckle said the Timelio deal was “part of a strategic move that aligns with our commitment to simplify our business, and reduce complexity”.
Timelio has developed technology to assess debtor risks, which is different to the approach of banks that typically assess an SME itself. But by looking at the quality of companies due to pay, funding can be unlocked on orders from overseas customers, or in foreign currency. Businesses can get paid immediately rather than waiting 30, 60 or 90 days for customers to pay.
Earlypay last week reported momentum in the new year, in part driven by pressures on supply chains. Ms Petris said Timelio had recorded the busiest January since the business started seven years ago, especially for businesses in fast-moving goods, logistics and distribution.
“Supply chain issues are continuing and businesses want to hold more inventory, but now there is also demand driving sales,” she said.
Commonwealth Bank made a tentative approach into the invoice funding space last year in a deal with Xero-owned Waddle, under which CBA will use its technology at the micro end of the market.
Octet secured a new $300 million warehouse facility last September from three Australian lenders, including a big four bank, on growing demand from e-commerce, manufacturers and construction groups wanting to make earlier payments available to sub-contractors.
Originally published by The Australian Financial Review