Damian Crowe – CEO Obillex
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Obillex is on a mission to transform Working Capital Management globally. Damian Crowe has assembled a world-class team with the necessary procurement, technology and finance skills to realise the vision. Today, trillions of dollars are locked in low-yielding investments while small business struggle with late payments and access to capital at a reasonable price. There is both a need and an opportunity to re-engineer this failing market.
The trend of the last twenty to thirty years toward the efficiency of enterprise systems presents both an opportunity and a challenge. Data flows easily within large organisations but fails to maintain that velocity and accuracy when moving between organisations. This is especially true when that data is to accompany a financial transaction, particularly across ageing infrastructures like SWIFT. Consequently, very limited use is made of current transactional data to support the provision of finance. Yet the combination of trading history, financial statements and current orders present a more compelling basis for a credit-rating, in real time, than anything offered by the ubiquitous ratings agencies. The situation becomes more acute with the record growth of small businesses, e.g. in the UK economy, moving in a different direction to the late 20th Century enterprise trend. Small business data, representing cash demand, increasingly moves into the cloud. At the same time government and large corporate data, largely representing cash supply, remains dormant in enterprise architectures.
The 2008 crisis gave us another demonstration of what happens when liquidity dries up and we now have the effect of Quantitative Easing, in a number of economies, with the new normal of low yields. Another consequence of the crisis has been further financial regulation and the need for various financial intermediaries to hold regulatory capital.Liquidity can be defined as the continuous availability of cash at a constant price across the economic cycle.
Liquidity can be defined as the continuous availability of cash at a constant price across the economic cycle.
This demand for high-quality, liquid assets is not currently met by the market and the ongoing tendency towards credit tightening at times of stress remains. The new normal has come to pass with disturbing pre-crisis characteristics.
Obillex presents an efficient and effective conduit for flows of cash into the real economy, with reduced risk and higher yield for the participating institutional investors. At scale, this is a world of technology enabled, real time, data-driven exchange of capital. Greater transparency of timing as well as the sources and destinations capital will be realised. There are built-in protections for the tails of supply chains from insolvencies at the, typically larger business, heads.
It is an environment of ready access to information-enabled capital, from sourcing and procurement decisions through to order fulfilment and prompt payment. This has the effect of accelerating the flow of cash through the economy. Credibility and scale is being driven by government-backed standards and principles.
Obillex is redefining traditional workflows, through the rigorous application of standards and interoperability, to deliver true liquidity; i.e. availability of cash at a constant price across the cycle. Innovative mechanisms to deliver this liquidity down the supply chain have become ever more important since 2008 due to the focus on counterparty credit and the resulting appetite for funding.
“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
Steve Jobs, 1989, Interview with Inc. magazine.
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Turning big business into an enabler of SME growth – Damian Crowe, August 2015
The Small Business Conciliation Service is being created as part of the Government’s Enterprise Bill because late payments are a major economic problem, widely acknowledged to have cost UK businesses over £32bn in the past year alone.
So imagine the perfect situation whereby an SME could be paid almost immediately upon invoicing one of its big company clients and pay a low cost for the privilege. Such a scenario has the potential to release billions of pounds into the UK economy and provide the required working capital to fund significant SME growth.
Whilst it sounds like a pipe dream this is exactly what we have been working to achieve at Obillex by addressing two major barriers – high cost charges for early payment and getting buyers and suppliers systems to talk to each – known in technical jargon terms as interoperability – to speed up invoices through the procurement system.
A key part of the problem is that many large organisations work with banks and enterprise proprietary software vendors who seek to dictate terms to the detriment of small business. Most senior decision makers are simply not aware of the impact on SMEs of the lack of procurement system interoperability of these vendors’ solutions. The Government has already begun to take important strides to simplify their own buying systems so that SMEs (traditionally shut out of large Government contracts) have a single point of entry. These open standards are being emulated across Europe, and the Pan-European Public Procurement Online (PEPPOL) service has been an important case study of the benefits of an interoperable system – just ask the NHS which now uses it.
Too often big businesses use finance systems to lock in their SME supplier relationships, and lock out competitors. With some banks using business payment systems that charge upwards of 20%, SMEs would be better off using their credit card to fund their working capital. Similarly, with failed e-invoicing project after project is it any wonder that many SMEs revert to the default of posted paper invoices?
At Obillex, we have developed a business finance solution where big business can embrace open standards and procurement systems that talk to those of their suppliers in a digital environment in order to drive operational efficiency. This is because we have developed a financial instrument that is system agnostic – meaning it can be deployed across any e-invoicing, ERP or accounting system. So now an SME can simply press a button to process their invoices through a digital environment.
Our financial instrument has also focussed on addressing the critical issue of accessing finance as cheaply as possible. We have achieved this by leveraging the credit worthiness of the big business buyer to attract investors to put up funds that enable almost instant payment of an invoice in exchange for a small fee. The fee level, which is the key, is due to the low investment risk involved in the transaction.
So the ideal scenario is no longer a pipedream. Instead, the perception of big business can now be transformed from foe to friend when it comes to their dealings with SMEs by playing a pivotal role in providing them with low cost funding and the working capital they need to thrive and grow.
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