Funding Invoice seeks to disrupt the invoice factoring market
Funding Invoice seeks to disrupt the invoice factoring market

SME’s suffer disproportionately from not being paid on time. Ironically, money to SME’s tends to end up in the economy faster than money to large enterprises. The University of Warwick has come up with an approach which it claims will speed up payments and ensure that cash flow is protected.

Aamar Aslam, Funding Invoice Ltd
Aamar Aslam, Funding Invoice Ltd

The solution is called Funding Invoice and offers to link clients (SMEs) with professional investors who: “buy invoices and provide up to 90% of their value straight away.” The whole idea is the brain child of Aamar Aslam who said: “While I was studying for my degree I set up a chauffeured car service to take VIP clients from large companies to and from the airport. I realised that many chauffeurs were doing business with these companies, but often not getting paid for 60 days, which was unsustainable for them.

“Funding Invoice is my response to that problem. Our system is really simple to use and our clients only pay a fee to the investors, not to Funding Invoice, so that keeps costs lower for them.”

Is factoring really the answer to cash flow?

On the face of it this is just traditional invoice factoring with a slightly lower percentage going to the investors than would normally be the case. We challenged Aslam about this asking why it was different to invoice factoring, who was taking the risk over the invoices and why we should be getting excited about it. His initial five point response was:

  1. There are no set-up fees, monthly fees, contractual lock-in, personal guarantees or hidden fees. It’s a pay-as-you-go service
  2. We don’t require that a company “factors” its whole sales ledger, it’s invoice-by-invoice and so is much more flexible.
  3. We don’t interfere with the relationship that our clients hold with their customers. I.e. they are left to collect payment of the invoice themselves.
  4. We’re operating a peer-to-peer model. Factoring isn’t technology – we have developed from scratch a state-of-the-art trading marketplace which matches investors and SMEs.
  5. Investors do indeed incur risk of payment failure.

These are very interesting responses. For example, it is becoming common practice for entire sales ledgers to be part of the factoring deal. This puts companies under some pressure because they often only want to factor out a part of their invoicing where they are most at risk. Often this can be very large invoices that have the risk to break the company where it is better to assume some loss through factoring than it is to lose the company.

However, this left some more questions. Such as:

  • If the customer is collecting the money are we really talking about a loan against random invoices where the investor gets 10% when the invoice is finally paid?
  • How does the system deal with late or disputed payments?
  • Was their any insurance that the investors could use to protect themselves?

Once again, Aslam was quick to respond saying:

  1. From the date the invoice is due, we allow a 60 day grace period to account for (very) late payment. Although every transaction is its own case, our general rule is that we request payment from the SME at this point i.e. 60 days after expected payment date. In the event of an insolvency of the SME, we have power of attorney and are able to pursue the invoice in their name to refund our investors.
  2. Re payment disputes, we minimise this risk by verifying invoices beforehand via an online portal that we’ve developed. It just requires that the debtor acknowledges the invoice is real, unpaid and accurate.

The responses are very interesting. It does indeed look like the investors are acting as a loan bank with a fee when the money is in. With a mechanism to reduce the risk of bad or potentially fraudulent invoices in place, the investors are assuming minimal risk. However, as they are not taking personal guarantees they are also taking the chance that a company may go into liquidation leaving them with big losses.

It will be interesting to see how many investors, the number of initial invoices, the value of those invoices and the number of end-user companies that are involved at the three-month, six-month and 1 year points. This will show if the market is mature enough for a change to the way invoice factoring is carried out and whether the risks to the investors can be effectively calculated.


Shaking up the invoice factoring system and providing a fairer value for invoices to SMEs is a great idea. The fact that it has all been done without any new technology or indeed any new software being created is good news as it means there is little to no cost in the system to be absorbed by either investors or users.

The UK has a large reliance on contractors in the IT sector and a fast growing number of technology start-ups. This announcement offers them a new way of dealing with their cash flow that should help many of them survive well beyond the first year and even get beyond the five-year point where companies that survive that long go on to last for many years.



  1. This is neither innovative nor a new way of dealing with cash flow concerns. Selective Factoring, and Factoring generally, has been around for hundreds of years, and is most definitely not the brain child of Aamar Aslam. It is not “becoming common practice for entire sales ledgers to be part of the factoring deal”, this is the traditional model, the invoice fiance industry generally is moving away from this model to a more selective model. Unfortunately University of Warwick and Funding Invoice are very late to a global party that has been around for years.


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