A recent conversation Marc Clapasson had with Payments Cards and Mobile
It’s an astonishing fact of business life that major global corporations attract all the attention from the press and analysts – and yet, in any region of the world, such corporations frequently account for much less than 50% of the economy. In the UK, for instance, 59.3% of total employment came from companies with less than 250 employees over the last five years – while in Germany, figures from the European Central Bank prove SMEs generated 54.4% of total gross value added (GVE) and 63.7% of all employment in 2019.
Marc Clapasson, Partner at ruvercap argues that Small and Medium Enterprises (SMEs) are too important to our economies to have their cashflow disrupted by outdated invoicing arrangements – and proposes an alternative that better fits the way business functions today.
Despite the importance of SMEs to the global economy, these firms face a number of challenges to their present cash-flow owing to somewhat out-dated invoicing requirements from global giants, which can impose delays of up to 90 days in honouring invoices from SMEs. To be fair to big international firms, it’s not hard to see why these practices were first imposed decades ago when invoices were processed manually and international settlement could take weeks, especially outside Europe and North America.
In today’s world, though, such practices can look out-dated at best and, at worst, may seem restrictive. Worse, from the perspective of an ambitious SME, is the brake such conditions place on their capacity to order raw materials, hire new staff with confidence, and expand into new territories and markets. To fund their ongoing operations and fuel their growth ambitions, SMEs need a better solution.
While it’s true that a wide variety of FinTech platforms are in development that promise to speed up the handling, management and processing of invoices, it is unlikely that such solutions are going to solve the challenges faced by SMEs in the next five years or more – not just because integrating these systems is sure to cost time and money in itself, but also because there’s little perceived benefit to the big international firms who dictate these terms, beyond the usual promise that FinTech will save all parties involved some costs, speed up processing times, and reduce error rates. At least in the short and medium term, it’s the time taken to receive funds that has to change – and that as quickly as possible, from an SME’s point of view.
I believe there’s an urgent need for an innovative new solution to the invoicing challenges faced by SMEs around the world. One that takes the wait out of invoicing by funding payment of an SME’s receivables up front, then uses a third party to deal with the creditor company for payment. Using this kind of method, SMEs can free up their capital and invest in new business, new staff and new products with confidence.
In today’s business climate, ruvercap addresses these archaic timeframes for invoicing by coming up with innovative finance solutions for companies, providing liquidity and funds for businesses to maintain their growth plans without waiting months to be paid.