Tradeshift takes on factoring lenders.
Image credit: Tradeshift.com
Do you hate waiting 30 days or longer to get paid? What if you could get paid instantly for every invoice in return for a small interest charge?
European company Tradeshift has built a free, unlimited online invoicing platform which has grown quickly to 150,000 businesses in 190 countries. It can scan paper invoices and charges developers who make apps that connect to the platform.
But the most interesting feature is an experiment called Instant Payments. Rather than be held hostage to 90-day payment terms, a supplier can get paid immediately by Tradeshift once a customer accepts an invoice in the Tradeshift system, Fast Company reports.
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Interest rates for advance payments are calculated against the buyer’s credit rating instead of the supplier’s. Tradeshift knows when a buyer has accepted an invoice and so it can offer financing at far lower risk than conventional factoring.
“We can do real-time credit assessments,” CEO and cofounder Christian Lanng told Fast Company in May.
Instant Payments was at the time being beta tested in England and Denmark, although most of the company’s users are in the US.
Interesting to think of the potential for cloud accounting platforms to add similar financial services. Xero has launched online invoicing, MYOB is certain to follow.
It’s hard to imagine accounting software companies providing centralised lending against invoices to thousands of businesses. Then again, one can’t underestimate the transformational effect of cloud computing.
It’s going to be an exciting year.