Innovation for funding providers
Innovation for funding providers
Banks are still the main funders of working capital programmes. However, with the ever-increasing challenges around compliance and capital restraints, there is more and more opportunity for other funding providers in this sought-after asset class.
In the last few years, we’ve seen significant growth in programmes funded by asset managers and investors from the capital markets, deploying their capital in funding programmes across SME portfolios and mid-market corporates managed by independent funding providers.
Aronova work very closely with funding providers, and we have been able to help them to increase their capability and returns.
CHALLENGES FACING
THE INDUSTRY
While non-bank funding providers face many of the same challenges as the banks themselves, they also have unique obstacles to overcome. In this competitive space, differentiation from the competition can be difficult, both to the potential borrower and to the organisations they approach for the funding.
The process of gathering information on the borrower, analysing the portfolio for presentation to funding sources or insurers, and structuring the programme can take so long that the advantage can be lost at these early stages, and the opportunity becomes vulnerable to competition.
Increasingly, providers of capital need assurance of operational rigour to protect themselves and their investment for the life of the programme, which can be a long-term investment of 3-5 years or more. Detailed analysis and modelling is critical to success.
HOW ARONOVA WORKS
Aronova specialises in working with Funding Providers, through an approach trusted by many across the industry. Our long experience helps them to win more opportunities, secure more funding and to grow their business.
EVALUATE
EVALUATE
We start working with our partners from the moment they have identified an opportunity. Through a simple Excel upload of standard invoice data, coupled with automatic data validation algorithms, we are able to provide near-instant analysis of the risk and performance of the portfolio.
Our strategic partnership with Dun & Bradstreet enables us to match the underlying obligors or suppliers to a DUNS number, confirming the exact legal entities in the programme and identify their associated group structures. This helps to reduce the risk of ‘fresh-air invoicing’ as well as providing additional information such as sector, date of incorporation and legal form.
As a result, our partners can quickly evaluate the opportunity. They can present it clearly to their investors and quote for a tailored funding programme aligned to the needs of the borrower.
DELIVER
DELIVER
Effective early-stage evaluation of the portfolio means that everyone involved can move quickly to structure the programme. Once the offer has been accepted, we set up regular feeds of invoice data into our system to obtain daily or periodic updates during the detailed structuring of the programme. Users of Aronova can tweak the settings based on live data, optimising the structure for the client while ensuring that all counterparties are effectively protected.
When the eligibility parameters have been agreed we configure them within our systems, testing every part of the company and invoice data to ensure that only the assets falling within these parameters are allowed through for funding.
PROTECT
PROTECT
Setting the parameters correctly in the first place is one of the most significant steps in protecting the policy. Throughout the lifetime of the programme, our solution tests every piece of new data the instant it is uploaded to ensure ongoing compliance and identifying anomalies.
These proprietary algorithms help to identify fraudulent behaviour or changes in the programme profile that could present a risk, trapping them prior to inclusion in the policy and alerting the underwriter to the threats. The system monitors the status of every invoice subsequent to cover and alerts users if any details change, which is nearly impossible with traditional reporting methods.
GROW
GROW
This effective, systematic approach means that setting up and managing programmes takes significantly less time and effort than traditional methods. This means that you can quickly expand your programmes and portfolio with confidence.
Funders and insurers can see the operational rigour employed, and borrowers receive tailored competitive programmes to increase the chance of an initial win and subsequent renewal rates.
HOW IT ALL WORKS
Pre-funding, corporates periodically need to provide us with a single electronic file of past and current receivables, sourced directly from the corporate’s accounting system. For simplicity and speed, and depending on data volumes, this is usually provided in Excel format.
“Aronova provides us with the visibility and control needed to run our global credit insurance programmes. We have written a number of transactions that we wouldn’t have contemplated without Aronova’s involvement.”