Invoice funding is not always factoring.
We were reminded of this in February when we highlighted a case study on social media marketing in the article Is Invoice Factoring Becoming Mainstream? We were intrigued by the company with an innovative marketing approach and decided to dig deeper in this interview with Tomer Michaeli, VP of Business Development at Fundbox.
A NY-based technology company, Fundbox is helping small businesses, freelancers and home offices grow by overcoming short term cash flow gaps. They also accept referrals from factoring brokers and are a new addition to the 2014 Directory.
Is Fundbox a factoring company?
Tomer Michaeli: No, Fundbox is a technology company that offers business owners and freelancers a way to convert their outstanding invoices into money in their bank account. We don’t buy the receivables from the business, but rather offer an advance which is based on the business’ outstanding invoices. We use our technology to automatically underwrite each invoice in a fraction of the cost of traditional factors
What transactions will your company consider funding?
We will consider funding any unpaid invoices. Since our process is entirely automatic we require several months of ongoing accounting activity using one of our supported accounting or invoicing apps (Currently QuickBooks, FreshBooks and Xero and many more in the coming months) to be able to properly assess the business.
How did you get your start in the invoice financing business?
We started Fundbox when we realized that small-business financing is declining while the demand is just growing, especially after the new business “baby boom” that followed the 2008 crisis. To cater to this market failure, we developed a disruptive automatic underwriting technology which enables us to lower underwriting costs effectively to zero, thus allowing to underwrite small business credit, even for very small amounts.
What unique benefits does your company provide?
- There’s no approval process and our online registration takes about 20 seconds. The initial data processing (happens just once) takes between several minutes and a few hours. This lowers friction and deal closing period.
- We have no interaction with the business’ customers, no one but the business owner knows that he/she is using the service.
- We allow businesses to clear very small amounts, as low as $100! Moreover, we are providing our customers with the full face value of their invoices.
- Fundbox doesn’t interfere with the day to day running of the business. Our service is integrated into all the leading accounting and invoicing apps. As a result, new invoices are automatically pulled into the business’ Fundbox dashboard. All that’s left to do is to choose which invoice to clear.
- Business owners can choose to repay early the outstanding balance of their advance at any time during the repayment plan. We will waive the clearing fee of the remaining period, effectively making Fundbox a cash flow management and optimization tool: clear unpaid invoices when you need the cash and repay early when you don’t need it anymore.
Will your company work with brokers or consultants and how do you handle the commission structure?
Fundbox works with brokers and consultants, who comprise an important part of our customer acquisition channels. Our commission structure is an upfront flat fee, where Fundbox assumes all the risk. For partners who refer more than a certain number of customers to Fundbox, we will offer this partner a profit-sharing option, where Fundbox and the partner share the upside up to a certain cap.
This structure is especially attractive since our users tend to use Fundbox repeatedly.
What do you consider the best methods for finding invoice funding leads?
We believe that some of the best way to generate leads are:
- Creating trust – bookkeeper and CPAs, for example are trusted by their clients to advise them on the financial aspects of their business.
- Thought leadership – people turn to thought leaders to advise them on issues such as financing decisions.
- Offering a comprehensive suite of services – business owners prefer getting all their services for as few providers as possible. Offering several services is a great way to become a one-stop-shop for customers.
What advice would you give to new professionals just starting out in the industry?
Focus on bringing the first clients and then fiercely use customers’ referrals and word of mouth.
Where can people contact you to obtain more information?
Small business owners who are interested to learn more about Fundbox, can visit our homepage at https://fundbox.com
Brokers and consultants can contact us at affiliates@fundbox.com or at our homepage through the “need assistance” feedback box.
Is there anything else you would like to share with our readers?
Fundbox is partnering with traditional factoring players, who seek to stay ahead of the competition by lowering their underwriting costs and by opening the huge underserved small business credit market they cannot serve today.