iwoca launches iwocaPay to help SMEs with trade credit crunch

Source: IBS Intelligence 2020-06-08

European small business lender iwoca has announced the launch of iwocaPay, a tool to help businesses work through the pandemic. The tool aims to reduce the risk in payment terms and encourage SMBs to offer trade credit. It allows customers to choose their repayment term of up to 90 days and enables suppliers to be paid through the company. iwocaPay is expected to cater to the needs of both customers and suppliers by improving cash flow in times of crisis.

Research published by the company has revealed that the pandemic has created a trade credit crunch with many SMBs facing unpaid invoices. It showed that 40% of businesses are currently facing over £10,000 in unpaid invoices. The study aims to explore the methods in which payment terms were managed before and after the pandemic.

Christoph Rieche, co-founder and CEO of iwoca, said, “What’s emerging is a concerning game of ‘tug of war’ between small businesses as they look to survive and plan for the future. Buyers can’t pay their invoices because they don’t have the revenues and sellers are being asked to provide longer payment terms to ease the strain whilst already sitting on a growing backlog of unpaid invoices. Coronavirus can and should help trigger a step-change for small businesses to become more efficient, productive and resilient. We believe the first and most obvious change is to make payment terms fairer between suppliers and customers.”

iwoca has stated that the trade credit crunch has been caused by various factors including the increase in the proportion of SME owners who owe large payments as well as an increase in businesses asking for longer payment terms from suppliers. It also showed that suppliers are demanding payment upfront or shorter payment terms as they haven’t been paid and are being owed almost twice the amount.

Recently, iwoca received accreditation by the British Business Bank under the Coronavirus Business Interruption Loan Scheme (CBILS).

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iwocaPay

credit crunch

Europe

iwoca launches iwocaPay to help SMEs with trade credit crunch

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