Apr 19, 2021: Invoice Factoring w/ MarketFinance

Written by Dragos Cocosila

We have a lot to share this week as part of our passion to continue providing you with industry-leading information on the global Open Banking segment. This update will have the weekly additions to the Open Banking Tracker (Banks, APIs, TPPs, etc.), a look at how Open Banking is streamlining the due diligence of invoice factoring companies.

factoring

Our Current Coverage

  • • We track 2,802 banks providing Open Banking services! (+11 from last week!)

  • • 1,024 APIs currently tracked on our platform!

  • • 434 TPPs in the ecosystem!

  • • 86 Global markets covered!

  • • 35+ Open Banking API Aggregators! (with more coming very soon...)

  • • PSD2 API & PSD2 Open Banking coverage!

  • • Track over 60+ data points for all Open Banking projects!

And we are growing on a continuous basis... 🚀🚀🚀

Developments (Apr 13th to Apr 19th):

We initiated coverage and provided Open Banking API information for:

  • 3S MONEY: a London-based challenger bank, focusing on international trade.

  • Aargauische Kantonalbank: a cantonal bank based in Switzerland.

  • Dah Sing Bank: a Hong Kong-based banking and financial company, headquartered in Wan Chai. It has three main banking subsidiaries providing relevant services through a branch network of around 70 branches over Hong Kong, Macau, and Mainland China, and a securities trading company.

  • Dhaka Bank: a private limited commercial bank in Bangladesh. Its headquarters are situated in Dhaka. Currently, the bank has 100 branches and 3 SME Service Centers around the country.

  • Hatch: an FDIC-insured business checking account with up to 5% in cashback rewards, perks and discounts, no NSF fees, and a Mastercard Enhanced Debit Card.

  • • Biggest Publicly Available TPP Registry in the Industry! 🚀🚀🚀

  • • And many more!

We continue to cover over 35 aggregators!


Open Banking Use Case Spotlight: Invoice Factoring w/ MarketFinance

Invoice factoring is a transaction that a business undertakes to convert future cash flows into cash provided by a factoring company. After having made a sale on credit where they receive payment at a future date, the business will turn to a factoring company that buys the accounts receivable for typically 80-90% cash upfront. The remainder, net of factoring company fees, of the invoice paid to the business after the factoring company collects the payment from the original client. The factoring company takes on the counterparty risk of the client not paying the invoice in full, so they can be in a deficit if they receive less than the funds they provided for the business at the initiation of the factoring transaction.

The invoice factoring practice has been in existence for millennia, and an integral part of helping businesses unlock the liquidity held in their accounts receivable. However, even in its most recent incarnation, the old system requires the factoring company to undertake sizeable due diligence to understand the magnitude of counterparty risk they assume on each factoring transaction. So the process can take a few precious days that a business on the brink of insolvency may not have. With the implementation of Open Banking by factoring companies like MarketFinance, the speed with which businesses have access to cash improves materially.

Using Open Banking, MarketFinance can connect directly to a consenting business’ current account and gather the information they require to make the factoring decision much faster. MarketFinance says:

“When a customer chooses to connect their business account to their MarketFinance account, they allow us to view their transactions. This technology gives us the ability to make more informed decisions about their customer base and business activity. So we can verify the activity faster and trust a higher invoice value without spending time checking it out first.”

Thereby reducing the due diligence burden on MarketFinance and increasing their confidence that a transaction is safe to proceed with, and giving the necessary liquidity to the business.

The takeaway:

Even business practices that started in antiquity can benefit from Open Banking. Factoring companies like MarketFinance use Open Banking APIs to streamline the essential component of their business, the due diligence. Using these APIs unlocks value for both the business that needs liquidity and the factoring companies need certainty that they will receive payment from the client. We can’t wait to see Open Banking technology be ubiquitous in this financial services space.


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Have a great week and stay safe!

The Banq team

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