Capital, it’s one of the key factors that can determine whether or not a small business lives to see another day. With this firmly in mind, entrepreneur Charlotte Petris and her co-founder-husband Andrew Petris launched a business that brings SMEs together with an all-important business element: the investor.
As is often the case, Charlotte’s path to business begun at a young age. Her parents owned and operated a motorhome rental business, and it was here that Charlotte says she experienced first-hand the difficulties of managing a small business without adequate finance. It was a period in life that she remembers vividly, a period she says drove her into the field of accounting.
“After starting my career with KPMG, I expanded my experience by working in various banking positions inside some the world’s largest banks, including the Royal Bank of Scotland and Credit Suisse,” Charlotte tells Dynamic Business.
“I was able to see how finance operates from the bank’s side of the fence. Before long, my desire to start my own business was overwhelming and I set up my first company, a consulting business, helping other businesses raise finance and grow, before starting InvoiceBid, where I could support businesses directly.”
Charlotte, alongside Andrew and his experience with investments and fund management, launched InvoiceBid in 2014. The business was created to bring SMEs and investors together for mutual benefit, an aim achieved by attracting investors to businesses with corporations or government bodies as customers.
“SMEs that have large corporations as customers typically have to wait up to 120 days for their invoice to be paid,” Charlotte explains.
“InvoiceBid enables the SME to gain access to the cash that is tied up in their outstanding invoices immediately, without waiting for payment. This significantly shortens the cash flow cycle, enabling them to grow their business faster.”
Businesses are able to raise much needed short-term finance by teaming up with a network of investors, which bid against each other in an auction to buy the business’ invoices.
It’s a simple and ingenious way to provide an SME with finance, and investors looking for ripe opportunities could have a smorgasbord of options. Investors range from high net worth individuals to family offices, hedge funds, SMSFs and finance professionals.
Put simply, a business applies online as a seller and, after approval, selects invoices to upload onto the platform. Funds are then advanced to the business within 24 hours of the auction close.
There are a number of invoice facilities out there, as many businesses would know, but Charlotte points out that InvoiceBid’s business model differs in some significant areas.
“We offer a pay-as-you-go service, so businesses select what invoices they sell and at what price, with no on-going fees or contracts – and it’s free to sign up,” Charlotte says.
“We have a fast, efficient online process that saves time, a business of any size or age can auction their invoices, and a competitive auction ensures our sellers get the lowest cost of finance. A big point of difference is that the cost of finance reduces over time, as you build up a track record on the platform.”
Charlotte says late payments of invoices have wide-reaching effects in Australia, damaging the economy and large corporates who often have SMEs effectively funding their balance sheet. A strain on cash flow is simply not sustainable for businesses, especially those in the small-to-medium-sized sector.
“We are passionate about supporting SMEs because these are the businesses that lead innovation and growth in the economy,” Charlotte says.
“The working capital we provide helps the business to accelerate its growth, by hiring new staff or buying new equipment to increase distribution and production, for example.”
The husband-and-wife team has been self-funding the business since its launch last year, utilising freelance consultants in the areas of marketing, branding and sales. Charlotte says it’s the tech aspect she has found to be one of the biggest challenges, pushing her to take on a number of courses on web development and coding.
In terms of growth, Charlotte says InvoiceBid will hold building awareness of its product and informing others of finance alternatives as strong priorities.
“I believe business finance is heading in the same way as industries such as music and travel that have all been transformed by new technologies,” Charlotte says.
“Growth in alternative forms of finance will continue to accelerate and our focus over the next few years is to build awareness of our product and continue to develop and support the platform and marketplace. It’s all about managing the growth right now to enable the marketplace to grow smoothly.”