MYOB, Xero Eye Invoice Financing Solutions

Accounting software vendors MYOB and Xero explore invoice financing solutions as retaliation ensues in the background over products that charge small businesses fees in exchange for faster access to unpaid accounts.

Many of Australia’s largest companies have been asked about their use of “dynamic discount” supply chain finance, the Sydney Morning Herald reported on Sunday (February 2nd). The practice gives suppliers shorter payment terms in exchange for a reduction in the invoice amount.

The scrutiny led Rio Tinto and Telstra to abandon supply chain finance altogether.

MYOB and Xero do not use supply chain finance, which is a method of reducing small business invoice payment times.

“This implies that large companies offer their suppliers a shorter payment window, often on condition that they accept a discount on the invoice amount,” the report said.

Conversely, invoice financing involves companies selling their invoices to a third party for a percentage of their value. It is attractive to lenders because the bills serve as collateral.

Greg Ellis, CEO of MYOB, said the accounting software company is building a branded invoice finance product in-house.

Ellis said the platform is still under development and has yet to be confirmed, but the company has assessed the strength of small businesses that might end up needing bills paid faster.

“Our ability to assess people’s credit is probably better than anyone else in the market… We have seen that our clients have been in business for longer,” said Ellis.

“We are still in the process of designing our invoice financing solution,” a spokesperson for MYOB told the Sydney Morning Herald. “However, knowing that cash flow remains a major issue for small businesses, we are working on a product that will have the best interests of small businesses in mind.”

Ian Boyd, chief financial officer of Xero Australia, said the company is focused on integrating third-party applications and not working with supply chain finance providers.

“This category, and its popularity with our small business clients, continues to grow as awareness increases and data and automation reinforce the value proposition,” Boyd said.

He predicted that invoice finance products will replace supply chain finance in the near future.

From supply chain finance to factoring, there are many trade finance solutions available. It can be difficult and confusing for small businesses to figure out what is right for their needs.



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