(MENAFN- ProactiveInvestors) () the electronic invoicing supply chain finance and spend analytics business is now fully embarked on the invoice finance strategy which adds a new leg to the business and should see it generate “considerable” revenues and profits.
That’s the view of chief executive Edmund Truell who recently spoke to Proactive.
The aim behind the move is to give the option for suppliers which use Tungsten Network for processing of e-Invoices to have those invoices paid early if they need the cash offering an alternative to traditional bank financing.
And the firm's ambitions have been bolstered by a billion pound financing deal for this side of the business which was recently struck with Insight Investment Management.
It means Tungsten won't have to go back to market to raise more money in the short term.
Insight has agreed to purchase approved-to-pay investment grade receivables that have come through Tungsten Network's e-Invoicing platform in Europe and North America.
"Essentially we can grow to the enormous scale that we've had the ambition for without having to endlessly go back either for equity or indeed to pursue a bond issue which was something we had been looking at but will not be doing in the short term" Truell said.
It comes following Tungsten’s acquisition of FIBI Bank (UK) plc earlier this year which has now been authorised as a UK bank.
“This (the invoice financing business) should be the most lucrative part of the (overall Tungsten) operation” Truell told Proactive.
Tungsten which only listed on AIM last year already operates Tungsten Network (formerly called OB10 – a business Tungsten acquired at the same time as the listing) which is the world’s largest compliant electronic invoice network.
It is said to be able to reduce buyers’ invoice-processing costs by 60% by allowing buyers to create and send electronic invoices to suppliers cutting out time consuming and costly paper processes as well as reducing human error.
The company currently serves over half of the US’s Fortune 500 and 67% of the FTSE 100 connecting the world’s largest companies and government agencies to their thousands of suppliers around the globe.
To give an idea of the scale already attained the group deals with more transactions than Paypal and its client book reads like a “who’s who” of the great and the good including such names as () General Motors General Electric Deutsche Lufthansa and Kellogg’s.
So now it can add banking to its list of successful operations - and this side of the business is currently the group’s focus.
Earlier this month (December) Truell said management’s “vision” which it had more than a year ago when Tungsten was established had now “come to fruition”.
He was referring to the early payment financing service following the acquisition of the bank which is already live in the UK and most recently the US. Germany will be next.
The system allows suppliers to be paid by Tungsten for invoices or indeed other expenses such as corporate parties earlier than they would otherwise.
Tungsten pays the invoice amount minus a small discount charge.
Truell explained how the firm now needs to prove that this side of the business is a reality and will be successful.
“It has been a slow and careful process to make sure the systems are in place so this financing option can be rolled out globally” he pointed out.
“We are going in the right direction. We just want to make absolutely sure this works properly” said Truell.
One of the reasons the group has held off from signing off on any loans until recently has been the large amount of fees Tungsten must itself stump up to fund transactions like this.
Going live in the UK and US will help to convince the market that Tungsten really is putting its money where its mouth is explained Truell.
The ingenuity behind the banking concept lies with the fact Tungsten already has a ready-made customer base through the invoice business to which it can roll out its financing option.
Truell says the group deals with millions of invoices and has 171000 suppliers on Tungsten Network which they can potentially enroll.
So the next few months should see plenty of newsflow at the company as the financing plans are rolled out and Truell hopes another “big buyer” - a Fortune 500 type - is added to the client list.
Half year results are due in the second week of January which should throw light on how things are progressing.
The prelims in July showed a company that was invested for growth.
There was a 20% growth in the value of e-invoicing processing in the year to 30 April to US$152bn from US$126bn the year before.
The volume of e-invoices processed increased to 12.5mln in 2014 up more than 16% from 10.8mln in 2013.
Truell explained how the group’s tie-up in Brazil with a local partner is now complete which will be a very important market as it looks to enrol further big buyers to Tungsten Network in one of the world’s largest economies.
In addition the strategic partnership with PNC Bank the fifth biggest commercial bank in the US is also progressing with the a lot of work having now taken place integrating the Tungsten Network service into PNC’s existing offering.
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