Fintech, or financial technology, is a vibrant industry that is spawning new ways for SMEs to finance their operations. Equity crowdfunding is but one such way. For instance, AREX is a Finnish startup that runs an automated real-time marketplace for trade receivables offering SMEs financing on their terms.
Financing has for long been stuck in the 90s. Simultaneously as payment terms to suppliers get longer, regulatory pressures increase and large banks have less room to manoeuvre when building their offerings to SMEs. Getting short-term financing is hard, but access to working capital and cash flow is vital to all businesses.
AREX has built a completely new way of financing. SMEs are the foundation of any European economy and AREX provides equality and liberation into a sector that has previously been dominated by banks and the establishment.
AREX differs from similar services offered by banks or factoring companies in three main ways.
Modern technology enables the automation of many processes, such as credit ratings, collection and accounting. The cost savings for improving the efficiency of processes have been directly transferred to fees paid by companies. AREX charges only a 0.25% commission per invoice financed. At its best, AREX is up to 80% cheaper than traditional financing institutions. Banks and the establishment make their profit with hidden costs and obscure pricing models. We say no to hidden costs – all our processes are transparent.
Professional investors acting on the AREX exchange bid to participate in financing the invoices, just like on a normal stock exchange. This process guarantees you’ll always get the best market price.
The starting point for AREX was a desire to create a service that takes into account different SMEs' volatile and occasionally strongly seasonal business and need of financing.
A company using AREX is always in control. As other modern cloud services, also AREX can be used as much or as little as needed at any time. The user decides and sets their acceptable financing cost. Smaller companies shouldn't get unfair terms just because financial institutions have rigid processes.
We noticed that several services in the financing industry are time consuming and difficult to use. The backbone of AREX is effortless registration and use – you can use AREX directly from your browser.
Registering to AREX is cost-free and takes five minutes. We need to verify your bank account, which means that you’ll get a functioning account in 24 hours. You always get the financing decision on the same day you have uploaded the invoice to the exchange and you’ll get payment on your account in under 24 hours.
AREX is used by a broad variety of successful SMEs from different industries with diverse situations and needs. One of the most common problems AREX solves is long payment times which strain cash flow. The financing crisis has forced banks to tighten their loan terms which has made receiving short term loans nearly impossible.
Several subcontractors of large multinational corporations use AREX in order to finance their invoices immediately and make the money to profitable use. Furthermore, payment of holiday pays or VATs can cause temporary trouble in cash flow, in which AREX has been experienced as helpful.
Invoice financing is also used for systematic growth optimisation. For example wholesalers finance invoices from large delivery quantities in order to liberate money for new orders.
This post was written by Emma Sjölund, a content creator at AREX. With a background in economics and corporate communication, the fintech sector has brought Emma an enthusiasm for automatisation and digitalisation throughout all businesses.