In this series, we review and share accounting, HR, and other software that we think would be of interest to our clients and colleagues. Check it out! You might just learn about a great new tool for your business.
This month we’re spreading the word about fundpnb, a new app-based product allowing business owners to get short-term cash flow based on their invoices, similar to factoring, but much easier, with less weight on a business owner’s personal finances. We were fortunate to get a demo of the product from fundpnb’s founder & CEO, Satish Palvai, who told us more about the product and the ways it can help businesses succeed.
Tell us why you decided to start fundpnb.
In my previous ventures as a small business owner using a variety of products and services, I found the cycle of receiving payment from my customers and then paying my own bills left me with uneven cash flow. I decided to talk to business owners from a variety of industries to determine if this was a common problem for other small and start-up businesses and found that, typically, the answer was yes. One problem businesses cited was that it often took too long for their customers to pay them. Net 30 terms regularly turned into net 45 or 50 days. At the same time, these start-ups and small businesses were reluctant to ask clients to pay sooner for fear of pressuring customers and/or changing the dynamic of the business relationship.
Because of these late payments from customers, cash needed for day-to-day operations and growth wasn’t always on hand. Many had already tapped into credit limits with banks, and getting additional funds from banks was either not an option or too timely a process, taking anywhere from 8-16 weeks of meetings, paperwork, and an owner’s time before they received this much-needed money. Some business owners would tap into their own personal finances to support their businesses, which is also not an ideal situation. I thought there should be a better way to solve this problem.
I decided to start fundpnb to offer start-ups and small businesses access to cost-effective funds to fill cash flow gaps. Financing is a long and tedious process, with many hours of paperwork and detailed personal information required. We launched fundpnb to reinvent invoice financing and to provide a better experience for micro and small business owners.
So how does fundpnb work?
Users just sign up through our app and connect their business accounting software (e.g., QuickBooks) to take an advance on outstanding invoices. Our technology evaluates key data points about the business and advises on if the business can be funded. If so, we automatically initiate a credit to your linked bank account. The fee is a fixed fee of 2% of the advanced amount every 30 days, with automatic repayments every 30 days for up to 90 days.
If, for example, a business was to request an advance on invoices totaling $3,000, and they paid it off in equal amounts every 30 days, the schedule and fees would look like this:
Advance amount: $3000.00
|Principal + Fees||Total||Payment On|
|$1000.00 + $60.00||$1060.00||31st day|
|$1000.00 + $60.00||$1060.00||61st day|
|$1000.00 + $60.00||$1060.00||91st day|
Businesses can choose to repay the amount borrowed whenever they want, and fees would then be adjusted to reflect the 2% fee according to the number of days the borrowed amount was outstanding. There are no loan origination fees, no underwriting fees, no prepayment penalty, and no hidden fees.
When companies sign up, we only look at business information; we don’t ask for personal information. The process—including fund deposits and notifications—is entirely electronic. There are no manual interventions at any point.
What has response been like so far, and what kinds of clients do you work with?
Response has been wonderful. We’ve purposely worked with customers from a variety of industries, including high-tech IT, hospitality, and professional services. It’s given us a good understanding of how these businesses operate and ensured that our software is compatible.
We currently support a variety of businesses with varying levels of revenue, but our sweet spot are those businesses with a few million dollars in revenue. We can work with businesses that have less revenue or those that go up to tens of millions in revenue, but that few million-dollar range tends to be most common for us.
Visit Fine Point Consulting for more information about the great tools and services we use to help businesses succeed.