Mid-sized companies that are hungry for working capital are turning to an 'eBay for invoices’ start-up.
Despite only launching a full version three months ago, MarketInvoice has traded more than £1m of invoices
The co-founder of the site, which allows companies to sell individual invoices to wealthy investors, said he had been surprised by the size of companies applying to use it.
It has been used by businesses with revenues of between £500,000 and £10m but Anil Stocker said “much larger firms” have been approaching it in recent weeks, including one with sales of £70m.
“We never planned for such large companies to be wanting to use us so quickly but we’re trying our best to come up with a solution. It shows that traditional sources of finance are being scaled down, leaving companies to investigate alternatives.”
Mr Stocker said “balancing both sides of the market” to meet the demand would be the company’s greatest challenge in the coming months.
Since buyers include hedge fund managers, asset managers, family offices and wealthy private investors, Mr Stocker said it represents a new asset class for small companies invoices.
Buyers compete in a real-time auction which determines how much of an invoice’s value they will advance — up to 90pc — and the fee they’ll charge, typically between 1pc and 2pc. MarketInvoice takes a flat 0.5pc cut of the invoice face value.
Deals can also be done on a “fractional” basis so buyers can bid on part or all of an invoice and cash is advanced in less than 48 hours.
The average auction size is around £30,000 and all of the invoices put through the site to date have been sold.