With Invoice Discounting, Flowing Funds For SMBs And Freelancers

Cash is king, the saying goes in the investment world, and the aphorism holds true for those who not only observe businesses but run them, too. To that saying, we can add a single word: Cash flow is king.

Liquidity, which can be defined as the availability, in real time (or with speed) of assets such as cash, is a key to keeping businesses of all sizes afloat. This can be held especially true for the smallest businesses — SMBs, of course, but even sole proprietorships and freelancers — that may need access to cash to pay urgent expenses.

In a recent pairing of firms aimed at improving liquidity for those small players, Wirecard, the financial services company headquartered in Germany, and FinTech firm Fundflow launched a a platform to discount invoices, initially in Germany. Through the platform, small businesses can sell outstanding invoices through Fundflow’s site. The FinTech then sets up refinancing with a number of institutional investors. In connection with the partnership, Wirecard serves to help handle the payment processing itself and also has provided the banking license that helps enable the launch in Germany.

In an interview with PYMNTS, Joachim Kaune, managing director at Fundflow, which focuses on the European market, said that the efficient management of accounts receivable can help bridge the gap between providing a good or a service and waiting for the cash that is due to arrive. The invoices themselves, with payment terms of 60 days or less, said Kaune, can be presented for early payment across the firm’s platform, and upon sale of that invoice, he said, “cash is available the next day.”

As more firms find themselves operating in the digital space, access to working capital by selling invoices can be done with the push of a button, said Kaune. And invoice discounting (ranging from between 2.8 percent and 6 percent) as a cash flow tool, he added, cuts across industries, from services firms in the digital space to logistics firms.