Purchase Order Finance a new mechanism to fund working capital for SMEs

Pictured at the Shannon Chamber and InvoiceFair seminar in the Oakwood Hotel in Shannon (from left): Aengus Burns, Grant Thornton; Helen Cahill and Peter Brady, InvoiceFair; William Cleary, management consultant; Sharon O’Dwyer, Greentech Plastics Ltd., and; Damian Gleeson, Grant Thornton and director, Shannon Chamber. Photo: Eamon Ward.



An obvious gap in the market for a mechanism to connect small and medium-sized companies (SMEs) with Capital Markets Funders to enable them access essential cash flow led to the formation of InvoiceFair, who have developed a market-based funding solution that is economically accessible to Irish SMEs looking for Purchase Order Finance.

The inspiration for InvoiceFair came from the co-founders’, Helen Cahill, Peter Brady and Ivan Fox, combined involvement and understanding of working capital, financial services, investment markets, and the dynamics of running a business. Their vision was to address the on-going market failure facing SMEs around access to appropriate solutions to working capital finance.

The company was recently awarded Deloitte’s ‘Most Disruptive FinTech 2019’ award for providing real choice and alternatives for ambitious SMEs seeking funding. Invoice Fair has traded receivables worth €400million since 2015.

The benefits that can be derived from access to the receivables trading platform were outlined at a recent Shannon Chamber seminar, held in association with InvoiceFair and Grant Thornton, at which a number of companies in the Mid-West outlined how it has helped them scale, expand into export markets, fund new projects and extend customer reach.

Speaking at the seminar, Ms Cahill CEO said: “While SMEs can fund certain elements of their businesses through traditional banks, their growth is often restricted by an inability to access the required working capital. That’s where InvoiceFair make a real impact; the platform enables SMEs to release working capital by selling their current or future receivables to a pool of institutional funders. Unlike traditional facilities, the SME, by accessing a deep pool of funders, will not run up against concentration or geographic limits and will be able to leverage on blue chip purchase orders to release cash when they need it.

“There is a burgeoning appetite for trade receivables by institutional funds, which our platform has access to. The platform gives SMEs a gateway to capital market funders, an audience they could not otherwise access. This big market failure is access to Purchase Order Finance and we are addressing this gap,” Ms Cahill added.

As Grant Thornton’s advisory partner, Aengus Burns stated: “We are seeing a growing number of non-traditional funders in the market, smaller operators who are nimble and flexible in their approach. They are looking for a great story, a business with a future led by strong, credible people.”

With a deep background in industry, InvoiceFair’s co-founder Peter Brady understands intimately the importance of working capital: “Companies need to have enough funds to pay the bills. The biggest challenge for many is not winning the big purchase order but the ability to fund it. They can’t get the materials in or they can’t get the people to deliver it. Releasing a percentage of the sales order value to acquire finance in advance enables companies to pay suppliers up front; to fund their supply chains.

“The Capital Markets Funders understand receivables and future receivables as an investment class; they have the knowledge to be able to understand the risk and  the strength of the business model. The InvoiceFair platform unlocks cash for companies within twenty-four hours; that’s the real benefit to an SME. Speed and flexibility mean everything when working capital is under pressure,” he added.

Sharon O’Dwyer, general manager, Greentech Plastics Ltd., Limerick, a user of Purchase Order finance from InvoiceFair, speaking at the seminar said: “Working capital is essential to the success of any company, particularly when you are in a position to win new business. The one thing you want to avoid with a finance provider is slow decision-making and this is where we have found InvoiceFair to be of exceptional benefit. We have access to working capital finance within twenty-four hours.”

Commenting on the value of a seminar of this nature, Shannon Chamber chief executive, Helen Downes added: “It is important to put the spotlight on any aspect of finance that can deliver benefits to companies, particularly the small to medium sized company. They are the lifeblood of our economy and any new platform, like InvoiceFair, and that has been already regarded as a game changer for financing working capital, has to be highlighted. We were delighted to host the seminar and to hear from two users of the platform, Sharon O’Dwyer of Greentech Plastics and William Cleary, a management consultant, who is vastly experienced in working with SMEs across multiple sectors.”