Alternative financing platform C2FO gathers pace

A platform enabling suppliers to bid to receive payment for their invoices early has set itself an ambitious target following acceleration in demand

A platform that enables suppliers to bid to receive payment for their invoices early in return for a small discount has set itself an ambitious target following acceleration in demand this year.

Described as a market for working capital, C2FO uses algorithms to connect large companies with their suppliers through a SaaS (software-as-a-service) platform in the Amazon cloud

This offers suppliers the opportunity to take payment early for invoices in return for a discount, freeing up cash for suppliers and making savings for the company paying the invoice.

C2FO currently processes $1bn of invoices per month, but at its current growth rate it is soon expected to process the same amount in a week.

This is another example of the growing alternative finance sector enabled by technology.

Colin Sharp, senior vice-president at C2FO, said there is an estimated $40trn worth of unpaid invoices at any one time, so there is a lot of idle money that could be stimulating economic growth. 

“Governments love us because it frees up cash for businesses to reinvest,” he said.

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He said the alternative for suppliers that need cash would be a bank loan, which would cost more in interest than the discount given to customers. As well as major corporates such as  Costco, Pfizer and Amazon using the service to pay invoices early, Sharp said there are hundreds of thousands of suppliers connected.

When a company puts its invoices into the system, they are automatically routed to the supplier which then makes an offer of how much it will discount for early payment. Payments are made immediately once both have parties agreed on a sum.

Governments support this type of platform as it ensures small businesses, which drive the economy, invest and grow.

Suppliers using C2FO are not charged but the business paying the invoice will give C2FO a small percentage of the discount.

The technology matches up companies that want to pay early and get a discount with suppliers for which the benefits of receiving funds early outweigh the discount on the invoice.

In the UK businesses have an appetite for alternative funding, with services such as peer-to-peer lending taking off.

The Peer-to-Peer Finance Association (P2PFA) recently said the alternative finance sector had doubled in size in the UK since the end of 2013, with more than £2.1bn lent in total. The organisation also revealed the number of lenders had increased by a third and borrowers by 90%.

According to research from the University of Cambridge, financial transactions through online lending platforms in Europe look set to become mainstream, reaching €3bn in 2014 and €7bn predicted this year.

The UK accounted for three-quarters (€2.34bn) of the 2014 total.

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