Startup Built From A Late Payments Crisis

The key to successful innovation is being able to solve a problem, and in the U.K., one of the biggest problems for small suppliers is getting paid late by their large corporate buyers. One startup has emerged on the market with this issue in mind.

Reports in The Herald Scotland published late last week profiled Urica, an invoice financing company that told reporters that SMEs will be struggling in the post-Christmas season.

[bctt tweet=”Urica says SMEs will be struggling in the post-Christmas season.”]

“Post-Christmas, they will be struggling for cash,” said Urica Chairman Lindsay Whitelaw. “Late payments are the real crime.”

Whitelaw noted that late payments now value at about $74 billion. “SMEs are roughly 50 percent of GDP but are finding it hard to get the lifebelt of cash that would allow them to grow,” Whitelaw added. “Without that, it’s very hard to see the U.K. economy pushing ahead.”

According to reports, Urica, which launched in 2014, pays invoices for a 2 percent discount and recovers the full amount of the invoice from buying companies after 60 days. Whitelaw told reporters that the company was founded to fill the current need among SMEs to access working capital to cover their losses while they wait for buyers to settle the bill. The technology available, however, was outdated.

“In many ways, invoice discounting and factoring is 40 to 50 years old, and its financial technology doesn’t really fit the needs of business,” he told the publication. “You can see that in its penetration of only 10 percent in the U.K. A lot of people use it and don’t like it, and a huge number don’t use it.”

The founder noted that other factoring companies pay just 75 percent of an invoice and are not transparent in their pricing policies. He explained that Urica was founded to fill about 98 percent of an invoice and to focus on companies further down the supply chain that cannot always access the same invoice financing programs that some large conglomerate buyers provide.