Boost cash flow by selling unpaid invoices in Xero

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Boost cash flow by selling unpaid invoices in Xero

Need to improve your cash flow? A fintech platform allows businesses to sell their future invoices – and it integrates with Xero.

It’s a common predicament: a major customer will pay an invoice in 30 days or more, but your stock needs to be replenished and employees need to be paid today.

Cash flow is a perennial headache for many business owners and managers – but getting credit can be an uncertain or costly proposition, especially if you’re a new small business or startup without a long track record.

Enter a fintech platform called Timelio, which allows you to unlock the cash tied up in your receivables by auctioning off your invoices to institutional investors and high net worth individuals.

The platform includes an integration with Xero that, in the future, will include a facility allowing you to auction your invoices directly from within your accounting package.

Timelio was the brainchild of co-founders Charlotte and Andrew Petris, and was launched in April 2015. As of late October, the platform had traded over $40 million, and was growing at a rate of 30 percent per month.

“We’re matching investors on one side of the marketplace, who are typically high net worth and institutional investors, with businesses who we term as sellers, and we provide short-term working capital to those businesses,” Charlotte Petris told BIT.

“All of our investors are sophisticated investors, and a lot of them are actively funding the invoices of businesses, and we’ve also set up a fund so investors can more passively deploy their funds on the platform and will invest across all the sellers on the platform.

“More importantly on our seller side, what we’re enabling is very quick access to investor finance, it’s very quick and flexible. Invoice finance is not necessarily a new product, but the way we’ve approached it with our flexibility is certainly new, and also our technology.”

There are two fees for sellers: a transaction fee on each invoice and a discount fee to Timelio investors. The total cost depends on the invoice value and expected payment date, and is displayed before the invoice is financed.

Eligible invoices

Petris stresses that Timelio’s invoice finance model works by selling invoices rather than by loaning money against invoices. The platform has a minimum invoice size of $10,000, and sellers are required to pass financial and anti-fraud checks before participating.

“An example is an invoice where a business has sold goods to a large corporate, which might be Woolworths, and Woolworths is not going to pay them for 60 days. If their business is growing they need that cash to pay employees, pay suppliers and so on,” Petris said.

“We pay them that money upfront, and then Woolworths pays us that money in 60 days’ time on that invoice, so they’re getting an advancement on their future cash flows, and that enables that business to grow and invest in their business.

“The types of businesses we focus on are B2B businesses; those that have large corporate or government customers – we have a lot of government invoices. One other thing we do is we fund R&D tax refunds.”

Xero integration

Currently, the sign-up process for Timelio has been integrated with Xero, with further enhancements and MYOB tie-ins expected for the future.

“The initial integration enables a seamless signing up process for the seller and on-boarding through filling in financial statements for us to make an assessment of their business. Right now, if you have an invoice in Xero you need to download the PDF and then upload it on to the platform,” Petris said.

“But one of the things we’re working on in the second stage of our integration is to make that process automatic. So you raise an invoice in Xero and you can push it into our platform, and then we can pull that across to our platform.

Andrew and Charlotte Petris

“We have a lot in our tech pipeline around how we’re going to enhance that integration, but it’s really to enable a much smoother experience for the user. And even things like posting journal entries for the users is where a lot of the headaches take place.”

A growing proposition

The platform recently raised $5 million in an oversubscribed equity funding round backed by Thornley Investment Group, which included the launch of a capital fund offering a fixed income return to investors.

“Our vision is to be a really tech-focused enabler in this space, and that’s what been missing from the traditional providers. And there’s no-one who’s really nailed the technology in the invoice finance space, even including the banks,” Petris said.

“We’re hiring in lots of different areas of the business in marketing, business development, sales, and operations. We’re rapidly expanding the team across all of those areas and we want to hear from good people who are passionate about what they are doing.”

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