More UK small and medium-sized businesses (SMEs) will be able to get their invoices paid instantly, better manage their cashflow, and improve their overall creditworthiness. The innovation has been made possible through a new partnership, combining invoice finance provider Penny’s instant payment services with CRIF’s credit scoring solution. The collaboration brings CRIF’s expertise as an Open Banking solutions provider to the world of invoice financing.
There are 5.5 million SMEs in the UK, making up over 99% of all businesses. Together, they employ 16.3 million people with turnover estimated at GBP 2.3 trillion. The partnership between CRIF and Penny comes as more businesses across the country face challenges due to the uncertain economic climate:
Nearly one in three businesses said that they had experienced an increase in the late payment of invoices in the last three months of 2021;
Almost one in 10 said late payments were now threatening the viability of their business.
Penny’s invoice financing solution works by allowing a business to advance money against the amount due from their invoiced customers. The invoiced customer then pays Penny directly with terms typically over 30, 60, or 90 days. However, if a true picture of a small businesses’ financial situation is unavailable, this can lead to them being declined.
The new service utilises CRIF’s Credit Passport, which uses Open Banking data to provide a real-time, secure way of speeding up the decisioning process for lenders and providing transparency and advice for SMEs on their creditworthiness.
Penny customers will be able to connect their business bank accounts, allowing an instant soft credit assessment via Open Banking. This approach gives a fuller, more accurate picture of a business’s finances than traditional types of credit scoring and reduces fraudulent applications by establishing a historical relationship with the invoice subject.With data refreshed daily, businesses that may have previously been rejected due to a lack of credit information can now get their invoices paid instantly, with the decision process cut to less than 30 seconds and funds released within 24 hours. Utilising Open Banking in invoice financing in this way enables a clearer, more accurate picture of a business’s creditworthiness and allow for more informed, lower-risk lending decisions to be made. This innovation is expected to lead to more business applicants being accepted for loans through Penny.
The announcement builds on previous work between CRIF and Penny to offer invoice financing to Credit Passport’s 30,000 registered SME customers, by allowing SMEs to access instant invoice financing directly through Penny’s services. This new partnership service will be available to customers in June 2022.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now