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Iwocapay is a new business venture from iwoca, one of London’s leading Fintechs, to offer payment terms as a service. Metaphorically this is a cross between a domestic version of trade finance – helping finance a supply chain – with an oldschool (and rather harder to get these days) bank overdraft – ie a flexible facility which can be paid up and down at will. PTAAS means that suppliers get what they want – goods out, cash-in whilst customers get optionality to manage payment terms as proves most convenient to them.

Gilman.jpg">Gilman-150x150.jpg" alt="" width="150" height="150"> In this world of post-covid destruction of the economy in the UK small businesses have had the largest hit ever. Fintech cannot sort that but it can oil the wheels of financing supply chains and as we know most businesses go broke due to inadequate cashflow/financing than as they are making losses.

Thus now more than ever innovations for the small businesses that are iwoca’s core market are needed.

In this episode Lara Gilman,, co-lead of iwocapay, takes us through this. Topics discussed include:

• books – reading them, getting behind with reading and the compare and contrast of reading books vs absorbing internet sugar lumps
• Bregman’s Humankind: A Hopeful History
• thesis and antithesis re “is man good” – synthesis might be to look at leadership and how that brings out attributes of mankind
• “the fish rots from the head down”
• how leaders set culture and how it is culture that glues an organisation together
• defining a culture – theory versus practice – the challenges of meeting standards and the need to evolve them over time
• correcting and acknowledging errors as a key cultural aspect – is failure a learning lesson or something to be swept under the carpet, brushed aside
• “honesty around imperfection”
• openness to dialogue
• guilds and then companies originally reflected/were microcosms of society and government – maybe now government needs to learn from the best companies
• Lara’s journey in Fintech starting with mobile money/GSMA
• iwoca’s challenge of building tech in order to answer the question “How do you make finance available to a million businesses?”
• iwoca formed in 2012 – to fill funding gap using technology
• retrenchment has dried up overdraft market
• Fintech has financed 30% of SMEs – 400,000 businesses <<
• critical nature of this lending to the economy as a whole
• iwoca’s average loan size is £10k – so core market is microbusinesses – “cafes and coffee shop” scale with single digit staff although larger businesses also go to iwoca driven by the high service standards
• core product is flexiloan – an alternative to an overdraft
• enquiring of their customers one of the chief uses of flexiloan was to pay a supplier or cover an invoice – hence wondering whether it could be adapted to be more tailored
• UK norm supplier provides customer with 30 day payment terms – note all the admin that is required with this
• payments as a service is the idea of amending flexiloans to enable supplier payments on variable terms/amounts by the customer
• supplier works with iwocapay and via PTAAS structure the customer has variable payment terms as suits them whilst the supplier gets paid up-front
• the supplier is now off-risk, has got paid and risk moves to iwoca and customer to manage
• supplier gets what they want – goods out, cash-in whilst customer gets optionality to manage payment terms as proves most convenient to them
• “30% of businesses said they were thinking of not working with a supplier due to the payment terms they offered.” <– points to the market for PTAAS
• unsecured lending with personal guarantee but with 8 years experience and 50,000 customers iwoca’s analysis of credit risk is a strength
• the UK govt’s BCR scheme which might lead to products without personal guarantees
• types of partner iwocapay is looking at working with