How Diaspora is Using Technology to Turn Your Invoices into Cash.

When it comes to financing your early-stage business, you deserve the choice and flexibility to find the best solution for your needs. Invoice finance is a great way to receive advance payment on your outstanding invoices. However, access is a problem for many small businesses. The reason for this is that big banks and large factoring firms don’t have the technology that is necessary to deliver single invoice finance at scale, and so financing small business doesn’t give them enough profit to be considered viable. In fact, these providers would much prefer for SME owners to assign their entire sales ledger for advance payment rather than single invoices. For SMEs this is an unattractive option as they are forced to assign their whole sales ledger for a minimum period of 12 or 24 months, whilst incurring monthly service fees, even if they aren’t using the facility. Single invoice finance on the other hand enables you to choose which invoices to turn into cash straight away. In order to make single invoice finance a reality for the thousands of SMEs, who form the backbone of the British Economy, there is an urgent need for innovation. 

Here at Diaspora we understand how to use and develop technology to address concerns both around cost and flexibility and to bridge the gap between these SMEs and large financial providers. The opportunity exists to utilise Open Banking, Artificial Intelligence and Machine Learning to revolutionise invoice finance which is a paper-heavy process. Traditional banks continue to place increased pressure on SMEs as they reduce their access to business overdrafts, prioritising big business, and refer them to “alternative lenders”. Consequently, invoice finance is an SME cash-flow lifesaver now more than ever. Diaspora is building an invoice finance platform is designed for the future. 

Today there is an abundance of technological resources that we can use to make invoice finance more accessible. Take Open Banking for instance, with this development in FinTech, the most important thing to remember is that you own your financial data, not the institutions that store and process it. Ultimately you get to decide how your data should be used. Diaspora is leveraging the API technology of Open Banking, so that small business owners can be empowered to use their data to increase their access to finance and share their transaction data with third parties. This means that you can instantly depict a more accurate picture of your business’s credit risk and financial health in real-time. There is no need for funders to waste efforts requesting up-to-date financial accounts from small businesses, or to rely on less reliable Companies House data – considering most SMEs do not have their statutory accounts audited and for the most part they are only abbreviated or summarised. Most funders require a high level of detail before they make a funding decision and Open Banking reduces the costs associated with gathering a plethora of information used to assess the eligibility of SMEs and potentially the debtors to whom their invoices are addressed. This is one of the many ways that Diaspora is bridging the gap between SMEs and the funds that they need. 

The handy user features that we will be able to implement within our platform, thanks to artificial intelligence, enables us to satisfy the needs and expectations of small business owners in this new era of Financial Technology. The data extracted from Open Banking APIs is further processed to analyse trends in your business performance to provide you with recommendations on the types of finance that you should be considering and when you should be taking action based on these insights and analytics. Keeping the needs of SMEs at the core of our what we do helps to establish Diaspora as your partner for growth as opposed to a mere service provider. 

As part of our mission to make invoice finance safer for funders and business owners alike, machine learning will serve as a powerful tool, rather than a robot to completely replace human interaction here at Diaspora. Over time, our platform will be able to utilise machine learning to quickly and efficiently process large amounts of data and identify trends and patterns that would otherwise be invisible to humans – thus saving time and reducing susceptibility of the decisions made on the platform to human error. Machine learning will also be beneficial in identifying potential defaulters ahead of time and allow a diverse range of customers to be captured and credit scored. As a result, funders can offer more favourable terms in greater confidence that the end customers have also been subject to rigorous checks. In terms of fraud prevention – the machine will be able to alert staff if a company should be looked at in greater context. This will inevitably help to combat the issues of double financing and invoice fraud, however collaboration will be a major key to success in these areas, as the machine only becomes powerful with increased and varied data input. Innovation is fundamental in moving invoice finance forward and providing greater financial support to the SMEs who form the backbone of the British economy. 

Join the thousands of SMEs using invoice finance and register to receive early access to the Diaspora trade finance platform by clicking here