Accountancy software giant Sage’s expansion into the world of alternative finance continues, as the company forges ties with two of the UK’s leading platforms.
Sage has partnered up with online SME funding specialists MarketInvoice and Funding Circle. The two alliances differ in mechanics, but both are broadly about improving access to capital within Sage’s vast SME client base.
The MarketInvoice hook-up strikes a familiar chord. AltFi readers may remember that the invoice finance platform began working with accountancy technology provider Xero back in August 2014. The aim was to provide faster access to capital, by plugging MarketInvoice algorithms directly into the accounts of prospective borrowers.
The Sage partnership is not dissimilar. MarketInvoice has integrated with Sage’s flagship SME accounting package – Sage 50 Accounts. The splicing of the two companies will allow thousands of small businesses across the UK and Ireland to access working capital in minutes, perhaps even seconds. Sage 50 Accounts users will be able to raise funds via MarketInvoice against outstanding invoices, licences, contracts and subscriptions – all of which MarketInvoice will be able to rapidly inspect and verify. An at once simple and elegant solution to small business funding.
“The support of top firms like Sage will be a catalyst for the already rapid growth of the industry, and naturally we’re very excited about what can be achieved together. We already support many of the UK’s most exciting, high-growth small businesses, and this partnership will make even more of these companies aware of how we can support them.”
On the Funding Circle front, Sage’s primary aim appears to be to simply raise awareness of the platform amongst its customers. The partnership will likely take the form of a referrals relationship, not unlike the deals struck between Funding Circle and the likes of RBS, Santander and PwC. But while we’ve not heard much as to the efficacy of Funding Circle’s existing referral schemes, the Sage arrangement smacks of significance. For not only does Sage boast deep reserves of SME clients, those clients – by dint of using an accountancy software in the first place – are likely to be above average on the tech-savvy scale.
“The Funding Circle marketplace is currently the fifth largest net lender to small businesses in the UK, in just under five years. But there’s still a long way to go – many small business owners remain unaware of the choice they now have when looking for finance. Partnering with Sage will allow us to grow awareness and trust, bringing more competition and efficiency to the small business lending market.”
Will Sage be earning any revenue through either tie up? We suspected not, as our understanding was that, for Sage, the driving force behind both partnerships was the desire to offer a more holistic service to their SME customer base – by assisting with access to capital requirements. However, having spoken to MarketInvoice and Funding Circle representatives, it would appear that Sage will in fact be earning money through the partnerships, via a revenue share model.
This isn’t Sage’s first foray into the alternative finance sector (nor, we suspect, will it be the last). In late May came the advent of Sage Small Business Loan, an initiative that was powered by US small business lender Kabbage. Kabbage provides both the technology platform and the capital, Sage Payment Solutions supplies the data and the deal flow.
With three separate alternative finance initiatives now lined up in quick succession, ought we to assume that Sage will be hungry for more of the same?
Lee Perkins, EVP and UKI Managing Director for Sage Group plc, summarised:
“Sage has been at the forefront of payment and funding innovation for years, and alternative finance is no exception. Sage Pay already provides a key piece of the business growth puzzle, and when it comes to small business accounting, Sage 50 Accounts offers the deepest and broadest hybrid accounting capabilities on the market. By partnering with MarketInvoice and Funding Circle, we’re giving Small & Medium Businesses in the UK the ability to swiftly and easily apply for additional funding to support their business development and growth.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.