Timelio co-founders Charlotte and Andrew Petris have created a peer-to-peer platform for invoice funding.
Large superannuation funds are preparing to enter the invoice financing market via the fintech start-up Timelio, which has created a peer-to-peer platform to provide capital to small companies seeking to expand.
Melbourne-based Timelio facilitated loans of $10 million during its first year of operation in 2015, by allowing small businesses to access funding based on the amount of money owed to them on unpaid invoices.
Timelio employs six full-time staff but is looking to expand to 50 to meet increasing demand from investors and borrowers.
It won’t disclose how many borrowers have used the platform but is targeting existing SME customers of banks and specialist factoring companies, including Scottish Pacific, which is planning an ASX listing, as revealed by The Australian Financial Review’s Street Talk column.
Charlotte Petris, who founded Timelio in 2014 with her husband Andrew after the couple moved to Australia from Singapore, says invoice financing has historically been stigmatised and many businesses say the quality of service from existing players is poor.
Big banks back
After the global financial crisis, the big banks withdrew from the market. They have since returned, but typically provide invoice financing only to larger clients, pushing smaller borrowers into overdrafts or seeking security in the form of property for business loans.
Customer service can also be sloppy. Just before Christmas, Timelio facilitated $1 million of loans on one day after banks began closing for the holidays, telling customers to come back and talk to them in the middle of January.
“It is a slow process that can take months and there is a perception invoice financing is expensive. We haven’t had one customer say they have had good experience with their invoice finance,” she says. “We are offering a competitive rate of finance without the additional costs, along with better customer service and experience.”
New Zealand-born Petris trained as an accountant and worked as a banker at Royal Bank of Scotland and Credit Suisse in London, along with a boutique investment bank. Andrew Petris was formerly at RBS Asset Management and moved to Singapore when it was was bought by Aberdeen Asset Management after the global financial crisis.
Investors on Timelio’s platform already include high-net-worth individuals and self-managed super funds, which can invest in particular invoices or fractions of an invoice. The new fund will open the market to large institutional investors by allowing them to invest in a package of aggregated invoices.
Petris says creation of the fund has been investor-led: several large institutions want exposure to the asset class, because of its returns and its liquidity. While a peer-to-peer personal loan might lock an investor up for several years, the average tenure of funding for a loan on Timelio is 40 days.
The annualised gross return across the Timelio book in 2015 was between 12 per cent and 18 per cent.
Figures from the Debtor and Invoice Finance Association show the total turnover for the invoice financing market for the 12 months to the end of September 2015 was $64.2 billion. This was up 3.4 per cent on the previous year.
Petris says Timelio, which raised $500,000 in a seed round in 2015 from a group of high-net-worth individuals and some of Timelio’s borrowers, is looking to expand the market.
“We have seen a lot of customers over the last 12 months who have not used invoice finance before, and we are creating a new market with them.”
Originally published by The AFR