More small businesses say NO to banks in 2019
Alternative-banking solutions are catching on at an exponential rate across Europe
Factris has published results for the first half of 2019, demonstrating the growth in alternative financing solutions. The report showed that from January to June of 2019, customer involvement with the company grew tremendously compared to 2018, revealing a significant shift in how small-business financing is taking place.
The details in the report show that, more than ever, small and medium enterprises (SMEs) across Europe are increasingly rejecting traditional banking in favour of more responsive financing alternatives when they need temporary cash flow. For example, from January to June 2019, Factris reported a 50% increase in the number of its clients compared to the same period in 2018. However, this increase is dwarfed by another statistic in the report: revenue growth of 861%, with the corresponding year-on-year increase in the size of the receivables portfolio. The success and growth reported by the fintech company strongly suggest a change is taking place in the European financial system.
As revealed in the report, prior to using Factris’ services, the average time SMEs had to wait to receive payment from their buyers was 36 days, placing a heavy burden on their ability to maintain working capital and stay afloat. Among these companies that had difficulty receiving payments, 23% were dealing with a non-paying customer in a different country, which further compounded the problems caused by delayed payments. The report also indicated who struggled most with late payments, noting that the professional services industry accounted for 30% of those turning to Factris’ financial solutions for support. After that, the transportation/freight industry accounted for 22%, followed by the food and beverage industry at 17%, and the construction industry at 9% of their customers. The remaining 22% of their customers were in the retail, manufacturing, and medical industries, respectively.
These details paint a clear picture of why many SMEs have chosen alternative financing companies like Factris over banks. Access to capital is critical for any small business to stay afloat, so SMEs need responsive financial support when problems arise —something traditional banks are notoriously slow to provide. Factris has seen that as an opportunity.
“What Factris has been able to do is capitalise on the bottleneck in cash flow caused by traditional banking solutions. Banks can’t match our rapid, personalised financial services,” notes Factris CFO Brice Laurent.
