Timelio was launched earlier this year by husband and wife team Andrew and Charlotte Petris. They are both qualified accountants; Charlotte previously worked in corporate finance, advising businesses on raising capital and financial transactions. Andrew worked as an asset and fund manager.
They both took courses on tech development and designed Timelio’s platform and back-end, and contracted someone to finish it off.
“I could see firsthand how hard it is for businesses trying to raise capital, and Andrew could see that there are many investors globally with excess capital seeking a return on their money,” says Charlotte, who is also the CEO. “And globally, with interest rates at all time lows, seeing a return of any significance is very difficult.
“So I guess what we’ve done is to bring together our skill sets.”
Companies selling their invoices isn’t a new idea. It is also known as invoice financing, debt factoring or receivables financing, and the yearly deals amount to over $60 billion in Australia alone.
Many growing companies face cash flow mis-timings, or need cash to invest, and are not able to borrow from traditional lenders because they don’t have hard assets.
“A typical seller for us would be a small to medium sized business, who is experiencing growth. So any business who is growing has a gap in their cash flow because they are required to invest in new machinery, new production, raw materials, staff,” says Charlotte.
Charlotte’s example is a “seller” who is a supplier to one of the big retailers. The retailer will settle their bills every 60 days, but in the meantime, Timelio’s seller will need to pay bills – wages and other incidentals.
On the day the invoice is drawn up by the big retailer, the seller can shop the invoice on Timelio. The team at Timelio will check it out for risk, essentially turning it into an asset, and investors will pick it up. The seller gets cash up front, albeit slightly less than the full invoice amount, and the investors get to pocket the difference.
The big innovation here is that Timelio has melded crowdfunding with invoice financing. “Sophisticated Investors” – investors with $2.5 million in assets or $250,000 in income, can buy chunks of invoices, hedging risk.
This expands the potential market on both sides – there are now more investors, and more small businesses can pursue this kind of financing. Charlotte says they have already had businesses ranging from mining services to electricians use their service.
“Invoice financing has been around hundreds of years, it is an old product,” Charlotte says. “So in itself there is a significant industry there.
“But what we’ve seen is that we are creating a new market, because 80% of our customers have not used invoice financing before.”