With the market expanding rapidly for flexible, alternate finance options for SME’s, Andrew Roberts, National Development Manager of Fifo Capital explains why their approach to the opportunity has differed to most, and why ‘it works’.

If you were associated with business at the time, many would recall quite vividly, just how challenging the market was to obtain business related finance post Global Financial Crisis. In the years from 2008 to around 2013, this writer can recall regular discussions with franchises and other business striving to grow, reporting being constantly stifled by a lack of capital to do so. 

Lower consumer confidence (all of us spending less), and uncertainty around the housing market created a scenario where credit for the small to medium enterprise sector (SME’s), became very difficult to get – in the absence of property security in most cases.

The Un-secured Capital Market

Fast forward to 2016, and it’s a different ball game. 

An un-secured capital market for business related finance is thriving, and Fifo Capital is a clear example of a business that is quickly becoming a recognised player in the space. 

“Last financial year the invoice finance market nationally was approximately $64billion.Yes, that’s with a B!” says Andrew Roberts, National Development Manager for Fifo Capital. “It is a massive market and while we know we are doing well, we have barely scratched the surface as far as the opportunity is concerned given the size of the entire market.”

Fifo’s core business is in single invoice finance, or factoring as it is also known. Essentially, SME’s can obtain credit secured against their invoices freeing up capital. This allows the business to invest that cash flow into other areas that help the business grow like new staff or sales increasing related activities. “We also have products in straight business finance in short term loans, that run for between 3 to 12 months. This is in addition to a flexi-pay product for business equipment purchases as well.

Clearly though, our invoice finance product is our largest, most profitable, and as such our core business.” Andrew continues, “Fifo has experienced consistent strong growth year on year since it began in NZ in 2005. Last financial year Fifo grew by 35%, funding over $214million in business throughout Australia. We have hit another new record only last month where we funded SME’s to the tune of $20million in finance. With $710million already funded by Fifo Capital, we are rapidly surging towards the magical $1billion in funding provided.”

“This is not just a number to us, but also a clear marker of our contribution to helping keep the Australian economy moving via the small business ‘engine’, by helping them grow with crucial cash flow. We are so excited by the role we are playing that we have a ticker counter on the home page of our website showing every dollar that ticks over that we fund – it’s very inspiring.”

Not Alone

Of course Fifo have not been alone in their expansion into the invoice finance marketplace focusing on SME’s. A search online for that finance product shows just how many providers are now in this marketplace. 

“In many cases they are our best marketing strategy!” explained Neil McMillan, Managing Director, Fifo Capital. 

“What we have found is that our business model is the right one for the product. We are built around personalised service, and as a small business owner, you get to speak with and meet the person who is directly funding you – our franchise partners. This personal, human touch, cannot be replicated by the mountain of competing ‘websites’ that require you to upload an enormous amount of personal and sensitive information and send it to who knows where, as part of your approval process.”

“Who has access to all this information people are blindly uploading about their financial position and identification data? I’m very concerned about the integrity of data security amongst these ‘website’ only providers in the market.” 

Andrew also continues, “This is clearly our competitive advantage. Having a network of ‘real’ people who understand small business, and are located in your area is crucial and comforting for those we are funding. We currently have 47 business partners out there all across Australia, and more in New Zealand, running their own finance business using our systems and model. 

Additionally, our association with QBE Insurance signals our strong position in the market in being backed by such an established corporate – we are clearly doing something very right. 

”Fifo also has added a slight twist to their model whereby you can establish your own finance business with them as either a franchise partner working with SME’s day to day, or now also an option to be an investor only and not directly involved in the face to face aspect of the transactions.

“With only around a dozen new partnerships awarded yearly, Fifo has certainly turned into a pretty exclusive ‘club’ allowing people to become their own micro-finance business by tapping into all our knowledge, systems, insurance backing, and marketing”, says Andrew.

“We are all looking forward to our three-day annual conference on the Gold Coast next month. Where we focus on strengthening our network, up-skilling and taking time to recognise and celebrate our highest achievers with our Awards Gala Dinner. We really enjoy recognising and supporting each other toward outstanding success.