Cash flow management is only as efficient as the management of invoices. The management of invoices is only as efficient as the ability to get them in front of the appropriate parties and give them incentive to pay — or, if you are the firm paying, the incentive to foot the bill.
Earlier this month, Tungsten Network, the alternative finance provider, said it overhauled itself and is in the midst of relaunching its Early Payment solution geared toward SMEs. The latest retooling allows firms to leverage their existing relationship with Tungsten through eInvoicing to access funding for their outstanding invoices online by clicking a button.
In an interview with PYMNTS, Prabhat Vira, president of Tungsten Network Finance, the supply chain arm of the firm (in another corporate action, Tungsten recently sold off its bank), stated that better management of invoices, in part through technology, can help unlock the $825 billion that is held up in the United States alone via unpaid invoices and significantly improve the operating health of SMEs (the firm has also pointed to similar inefficiencies that are the hallmark of small businesses in the United Kingdom). The current state of cash flow management, he told PYMNTS, can be understood through “push and pull” — firms hanging onto payments (thus keeping cash on hand) versus “pulling” to get paid by customers.
The key, he continued, is “to create a new paradigm” against so large a gap that exists between those opposite ends of the payments cycle. The executive noted that the movement toward alternative finance — working away from the traditional funding sources, such as banks, and toward less traditional backers, such as asset management and short-term funding from, say, online lenders — can free up cash for the smallest of firms to grow. Vira stated that the SME arena includes companies with annual revenue run rates from $1 million–$2 million to as much as $50 million. Of the 47 countries in which the eInvoicing solution is available, said Vira, the U.S. and U.K. are 80 percent of volume.
The existence of a submission and approval platform such as Tungsten’s, said Vira, provides several advantages, driven by data. First, he said, there’s the ability to offer a one-stop shop for invoice management, from paper to electronic submission, while speed of pace allows for funding to be accessed quickly and frequently on terms better than those offered by traditional banks. Vira also said that the Tungsten platform has no attendant fees tied to the financing process.