£150m of cash available for that URICA moment
A COMPANY which acts as an early payment network for SMEs has targeted specific Manchester businesses to supply £150m of credit.
URICA is already working with up to 10 companies which are receiving a combined facility of £500,000 in the Greater Manchester area but chief executive Lindsay Whitelaw is keen for more to get on board.
Whitelaw is on a mission in the North West to spread the word about how his company can help resolve the age old issue which dogs many SMEs – cashflow.
“We regard the North West as an absolutely perfect area for this sort of product,” he told TheBusinessDesk.
“There are a lots of supply chains, a lot of good businesses. All we’re trying to do is look at the payment terms and taking dispute risk out of the way and credit risk out of the way.”
Whitelaw claims that although other companies offer similar services, URICA’S offer is unique because it supplies cash, rather than loans, and is backed by the largest credit insurer in the world Euler Hermes.
“What we’re offering SMEs won’t eradicate all their cash flow problems, but it is another funding option,” he said.
“How it works is really dead simple. Say you’re a supplier and I’m your customer. Before you come near me you will have a discussion over the terms you would like. You might say to me ‘I’d like to get paid early, but I would like to offer you a bit more credit’.
“So I’m paying you on day 50 at the moment. You say ‘why don’t you pay me on day 60 and all you have to do is sign up to the Urica platform and that allows you, the supplier, to get paid as early as day five.
“It’s all about the payment terms between the customer and the supplier.
“We provide the finance. Once we’ve got the agreement that the customer is going to pay on our platform, we can pay you as early as the day after invoice day.
“From your perspective, suddenly, you’re getting this cash early. You might have had to wait 50 days or whatever, but you’re getting it now.
“And the big difference is, that it’s outright cash. There is no rubber band attached. From you’re point of view, you’re solid on the injection of cash and working capital, so you can employ someone and take on new orders.
“The only cost you have to meet is a small early settlement discount. Say you were getting paid 30 days early, it would be about 1.3%. We are the only organisation doing this the way we’re doing it.”
Whitelaw said URICA is effectively an SME to SME-type solution, which also functions on a global level for exporters.
“We’re injecting money, not up at big companies, but much to companies lower down the chain and that money flows down to very small businesses.
“We try not to use the Heineken analogy, but it is kind of like that. We go to bits that existing systems and offers of finance don’t get near.”
Nationally, Urica has a database of 10,000 pre-qualified businesses which would be eligible to use the platform and, if they all took up the option, the credit pipeline would £10bn.
Meanwhile, Urica has agreed a partnership deal with the Engineering Industries Association to drive access to funding in the engineering sector.
Urica is offering credit lines to EIA members, ranging from £50,000 to £2m to eligible companies.
Some EIA members are already utilising Urica as a means to negotiate better payment.
Whitelaw added: “We are very excited to have teamed up with the EIA to drive necessary funding into the engineering sector.
“Our network will provide members with the ability to free-up suppliers from late payments and provide the critical cash funding that is needed today for key sector growth and to attract more local and international customers.”
EIA chairman Sir Ronald Halstead said: “The delays in paying invoices is a continuing serious problem for SMEs.
“Large companies are a problem and this action cascades down the supply chain.
“In addition, with the lack of real financial support from the banks, these are issues the EIA has been lobbying on behalf of SMEs in meetings at the Bank of England, with government departments and individual ministers.
“Cashflow and finance are vitally important to enable SMEs to invest, export and expand their businesses.
“Engineering is a growing UK industry with export demand stronger year on year; we see our partnership with URICA as an opportunity to support our members’ cash flow and support the continued growth in this industry.”