Funding Societies has launched Invoice Financing, a product in its range of offerings to solve cash flow and working capital problems for small and medium-sized enterprises (SMEs). Through it, SME applicants can receive funds upfront for their customer invoices, with up to 80% of invoice value and a term range of 30 to 120 days. The product has no collateral requirements, with an average disbursement time of 5 days and an average interest rate of 1% per month. Invoice Financing benefits SMEs in need of a quick and reasonably-priced cash flow fix with more funds for business operations and company projects.
Funding Societies is the first and largest peer-to-peer (P2P) financing platform in Malaysia. It connects creditworthy SMEs with individual and institutional investors through a digital marketplace, thus increasing access to financing for the SME sector. SME financing opportunities are funded online by interested investors through a process called crowdfunding. To date, Funding Societies can crowdfund within a minute, with a crowdfunding success rate of 100%. Its speed is aligned with the needs of local SMEs, who value quick disbursement to aid their cash cycles.
Based on the Economic Census 2016 report by the Department of Statistics, SMEs in Malaysia constituted 98.5% of total business establishments – making the sector a very significant contributor to the national economy. According to a speech by the Assistant Governor of Bank Negara Malaysia (BNM) this year, SME financing is showing an upward trend: more and more financial institutions are providing funds for the sector.
Mr. Wong Kah Meng, CEO of Funding Societies Malaysia, said, “Based on our local experience in Southeast Asia and Malaysia, we believe that invoice financing will fill a key gap in SME financing by enabling SMEs to encash their invoices upfront. Invoice financing is also particularly useful for SMEs who have been able to secure large customers who typically command longer payment terms of up to 120 days. Therefore, we wanted to create a product which will help SMEs to leverage on their growth opportunities. Compared to business term financing, SMEs opting for invoice financing will only need to make interest and principal repayments upon maturity rather than throughout the tenure of the financing. This repayment structure will enable SMEs greater flexibility in managing their monthly cash flows.”
He added, “Cash flow management is especially important for small businesses. An SME’s growth trajectory will be dependent on its ability to finance its future customer orders. Thus far, SMEs applying for invoice financing are either wholesalers or manufacturers who utilize our funds to purchase inventory or raw material to meet additional customer orders.”
Funding Societies also operates in Singapore and as Modalku in Indonesia. To date, it has approved more than 13,000 financing to SMEs totalling more than RM700 million across Southeast Asia. The company received the largest Series A and Series B Funding for a Southeast Asian P2P financing platform, amounting to USD 10 million and USD 25 million, respectively. Its Series B Funding round was announced in April 2018 and was supported by SoftBank Ventures Korea, Sequoia India, Alpha JWC Ventures Indonesia, and Golden Gate Ventures.
In Malaysia, Funding Societies is registered with Securities Commission. It aims to disburse RM50 million for the domestic market in 2018 and expand to the East Coast of Malaysia to serve more SMEs with accessible financing. On the engineering side, the platform plans to enhance user interface to improve customer satisfaction.
Launched in early 2017 in Malaysia, Funding Societies is the first and largest P2P financing platform in Malaysia. Funding Societies connects SMEs with investors through an online marketplace, thereby increasing access to financing for SMEs. By investing into SMEs, investors could earn risk-adjusted returns greater than fixed deposits, bonds, and other traditional investment instruments. Meanwhile, SMEs obtain access to short-term financing to expand their business through a fast and simple online process. Additionally, SMEs benefit from not having to provide collateral for financing, while interest costs are minimized due to short financing tenures.
Funding Societies also has presence in Singapore and Indonesia (where it is known as Modalku), becoming one of the largest digital financing platforms in the Southeast Asian region. Through its searing growth, Funding Societies remains dedicated to the vision of supporting underserved SMEs and improving societies in Southeast Asia.