More UK small and medium-sized businesses (SMEs) will be able to get their bills paid instantly, better manage their cash flow and improve their overall creditworthiness.
The innovation was made possible through a new partnership, combining instant payment services from bill financing provider Penny with CRIF’s market-leading credit scoring solution. The collaboration leverages CRIF’s expertise as a global leader in open banking solutions to bring full power to the world of invoice financing.
There are 5.5 million SMEs in the UK, representing over 99% of all businesses. Together they employ 16.3 million people with an estimated turnover of £2.3 trillion*. The partnership between CRIF and Penny comes as more businesses across the country are facing challenges due to the uncertain economic climate:
• Nearly one in three businesses say they have experienced an increase in late bill payments in the last three months of 2021
• Nearly one in 10 said late payments now threaten the viability of their business
Penny’s invoice financing solution works by allowing a business to advance money against the amount owed by its invoice customers. The billed customer then pays Penny directly with terms typically longer than 30, 60, or 90 days. However, if a true picture of a small business’s financial situation is not available, it may lead to rejection.
The new service uses CRIF’s Credit Passport®, which uses open banking data to provide a secure, real-time way to speed up the decision-making process for lenders and provide transparency and advice to SMEs on their creditworthiness.
Penny customers will be able to connect their business bank accounts, enabling smooth instant credit assessment through open banking. This approach provides a more complete and accurate picture of a company’s finances than traditional types of credit score and reduces fraudulent claims by establishing a historical relationship with the subject of the invoice.
With data updated daily, businesses that might have been turned down due to lack of credit information can now get their bills paid instantly, with the decision-making process reduced to less than 30 seconds and funds released in 24 hours. The use of open banking in invoice financing thus provides a clearer and more accurate picture of a company’s creditworthiness and enables more informed and lower-risk lending decisions to be made. This innovation is expected to allow more business applicants to be accepted for loans through Penny.
Sara Costantini, Regional Director for UK and Ireland at CRIF, said:
“The UK’s small businesses are the backbone of the economy, but many have struggled in the difficult economic climate of recent years. Added to this is the fact that some companies are denied access to financial support when lenders are unable to paint a clear and accurate picture of their finances, particularly if they have been negotiating for a short time.
“At CRIF, we want to solve this problem. That’s why we’ve partnered with Penny to bring the power of open banking to invoice financing, so more small businesses can get their invoices paid instantly, helping with cash flow while improving future creditworthiness.
Colin Gunnell, CEO of Penny, said:
“For more than 15 years, the UK’s 5.5 million SMEs have been consistently underserved by lenders and denied financing products available to their peers.
“Much of the SME market does not have access to corporate finance products due to the inability of conventional lenders to make real-time decisions. Penny and CRIF have both individually identified this as a universal problem in the UK that needs to be addressed, building sophisticated platforms to overcome the funding disadvantage suffered by SMEs.
The announcement builds on previous work between CRIF and Penny to offer invoice financing to Credit Passport’s 30,000 registered SMB customers, by enabling SMBs to access instant invoice financing directly through Penny’s services.
This new partner service will be available to customers in June.