A platform ensures that small businesses get paid fairly and on time
Financial Services
The fintech solution enables companies across Europe to get paid on the same day that invoices are issued
Spotted: Late payment is a pervasive issue for small businesses. In the UK, for example, three in five businesses are owed money from late payments, with one in ten reporting that late payment is threatening the viability of their business. And the economic impact of COVID-19 has made late payments even more damaging. Legislation, such as the EU’s Late Payment Directive, aims to tackle this issue, but innovators are also on the case.
Aarhus-based Fellow Pay is a disruptive payment solution that ensures small and medium-sized enterprises (SMEs) get paid fairly and on time for their services and products. With Fellow Pay, businesses can quickly send invoices and receive payments through a secure platform the very same day.
In exchange for a fee—equal to either 3.75 or 4.75 per cent of the invoice total depending on terms—Fellow Pay forwards the money to the invoice issuer up-front, recouping the cost from the invoice receiver within 60 or 90 days. The invoice issuer receives their cash immediately without having to worry about late or missing payments, while the invoice receiver also benefits as they have longer to settle their bill. As both parties can potentially benefit from this arrangement, the fee can be paid by either party or split between the two.
The system relies on a credit assessment of the invoice receiver—often a large corporation—but not the invoice issuer. Small businesses can therefore, in effect, benefit from the creditworthiness of their larger business partners.
Other fintech innovations helping small businesses spotted by Springwise include a SaaS platform that helps small businesses in Latin America, an app that lets micro-merchants turn their phones into point-of-sale devices, and a startup that provides more affordable finance to small farmers.
Written By: Katrina Lane
21st July 2022
Email: jp@fellowpay.com
Website: fellowpay.com