CML and Grow each buy invoice companies
Two finance companies have made separate acquisitions of invoicing solutions companies as both look to better assist their small business customers.
Grow Finance Group announced a successful acquisition of Australian Invoice Finance (AIF), which follows the successful purchase of the $121 million Eclipx Commercial business in September 2019.
Meanwhile, CML has executed a binding agreement to acquire Skippr Invoice Finance (Skippr) for an initial payment of $2.25 million via a mix of cash and scrip at CML’s choosing.
There is an expected earn-out structure over the next 2.5 years; maximum price of $6.5 million if all earn-out hurdles are achieved.
CML predicts the transaction to be funded by cash on hand, with target completion date by mid August.
Grow substance over style
“How Grow really set itself apart is where we've put a big spending in technology or fintech.
“Our entire spend of our fintech is all into the underwriting process rather than the onboarding process of the client, i.e. the fancy Web site or otherwise,” said Co-CEO at Grow Finance, David Verschoor.
“What we wanted to do was spend all of our money to determine how we can onboard a client to complete the KYC, to complete their due diligence on the client, from a credit risk standpoint.
“From a fintech standpoint, that's where Grow has spent its money.
“We see that credit sets ourselves apart from our competitors to write credit.”
Verschoor said all of the company's time and efforts have been spent on improving the customer journey from an underwriting standpoint rather than from a marketing standpoint to promote growth.
The team at Grow has now funded over $619 million to Australian businesses since inception and currently has more than 7500 client contracts.
Verschoor said Grow will unveil more plans now the sale is complete however, noted their onboarding portals are currently in the works.
“It’s been in the works for about six months. There are yet to be released to our customers and to our originators.
“Once they do, I think we'll get to the next level of growth through the Grow platform.”
Although credit risk was a concern, Verschoor added Grow have been assisting their SME clients where possible throughout COVID-19.
“We do have an obligation to help our clients through this very difficult time.
“Grow has gone out of the way to make sure that any client in need was able to find a way to have their loan deferred and able to get that financing they need for this period.”
Skippr push forward CML advancements
CML plans to combine Skippr with its current offerings (Cashflow Finance & Classic Funding) to launch a unified and expanded product offering.
This acquisition brings forward CML’s planned technology enhancement roadmap and development by approximately two years, the company.
CML stated that the platform will be leveraged by CML over time to improve client retention through an improved and more automated user experience for CML’s larger existing and new clients.
Daniel Riley, CEO of CML said the acquisition of Skippr is an extremely important part of the CML journey as Australian SME’s begin to source alternative working capital facilities such as invoice financing as they start to come out of COVID-19.
“We have been pleased with the recent rebound in performance in June which has continued in July.
“Our ability to offer more automation which will enable us to service smaller clients while providing our existing and future clients with a better customer experience will be important to maintain the growth we expect over this and future years.”