Not being paid on time is a problem many suppliers face all over the world. To negate this issue, a cluster of new fintech firms have begun making a charge to change how supply chains are financed. Greensill Capital, a fintech company founded out of Australia, uses an approach to take advantage of buyers’ low credit risk by raising funds in the capital markets and paying their clients’ suppliers on an agreed date. The lender will then wait to collect the full value of the invoice from the buyer at a later date. Currently, with low interest rates, and the period of finance being so short, the discount that Greensill takes is barely noticed by their customers, but it improves the cashflow for suppliers without shortening payment times for buyers–a win for both parties.
I believe this strategy for fintech firms could lead to a lot of success, but I don’t see there being room for as many firms as there are right now. I think eventually the market will reduce into just two or three large short-term lending firms to help the cashflow problem for suppliers.
http://www.economist.com/news/finance-and-economics/21714377-factoring-invoices-has-become-cheaper-and-faster-hard-pressed-suppliers-how