How Satago is changing the invoice financing game with embedded finance

Currently, getting invoice financing as an SME is incredibly stressful. Not only is the person in charge desperately looking for a quick cash injection, but they end up spending hours filling in PDF forms and deciphering costs and fees – only to be later told they aren’t approved.

This is a less than ideal situation for SMEs facing cash flow challenges.

Satago is an all-in-one cash flow management platform that gives SMEs and accountants the opportunity to cover cash flow gaps with invoice financing. We also help SMEs take back control of their cash flow with other tools: credit control, risk insights and a portfolio overview for accountants.

We recently announced our partnership with Sage, where we explain how we’re helping SMEs take control of their cash flow by embedding invoice finance within the Sage platform. This vastly reduces the time it takes to get invoice financing and is game changing for the lending and fintech industry as well as accountants and SMEs.

Note: are you an SME looking to learn more about Satago? Head to our product page to learn more about what we do!

The issues SMEs and lenders face in the invoice financing industry

At Satago, we’re very familiar with the kinds of issues SMEs and lenders face when it comes to invoice financing:

• SMEs usually wait until the last minute to seek funding. They’re hoping that an overdue payment will come in to allow them to pay their own bills, so by the time they’ve decided they need to secure funding, they need it now. This leaves them frantically going to their bank or lender to get the cash injection they need, which can be a long, stressful journey, and often a decision doesn’t come as quickly as they might like.
• There’s also often a gap between what SMEs need to borrow and what they can get, and with traditional lending they generally won’t know what that is. Being able to tell at a glance exactly how much they could borrow would save a lot of time and stress.
• SMEs don’t know much about the financials of the companies they work with, including who might be a credit risk, so they can have little understanding of how often they might realistically need to finance their invoices.
• Currently, lenders offering invoice finance have a very limited view of the SME and the risk of lending to them. Traditionally, lenders work in silos, so they’re starting from scratch each time when determining the potential risk of lending to a customer. This also explains why they still require SMEs to do a lot of upfront work before letting them know if they are approved.
• Lenders don’t have up to date KYC and AML documents. For large lenders, this can be very expensive as it costs them every time they do KYC and AML.
• In turn, this means SMEs have to repeatedly submit proof of address and proof of identity, which can be frustrating and time-consuming to organise in a world that is increasingly digital.

We knew we could help SMEs and lenders to streamline the funding process, so we got to work on our solution.

How we’re helping accountants and SMEs with embedded finance at Satago

We’ve joined forces with Sage to offer access to the full Satago suite within Sage 50, creating a fully functional embedded proposition that is one of a kind in the UK at this time.

With this proposition, SMEs that use Sage 50 can access invoice financing within the Sage 50 platform. Instead of having to sign up to multiple invoice financing solutions and completing and submitting PDFs, SMEs can get an almost instant response on whether they are approved for selective or full invoice financing. This allows the owners to sleep better at night, knowing they can leverage their debtor book quickly and easily within their accounting software, and that they’ll also know upfront what it will cost them, with no surprise hidden costs.

This proposition highly benefits the lender as well. Traditionally, the lending process is very siloed. It’s still incredibly manual, inaccurate and with constant KYC and AML checks, expensive. With our embedded finance proposition, we are fully integrated into the SME’s accounting tool, giving us full visibility over their affordability and therefore being able to give them a response almost immediately, with much more accurate pricing. It’s a win-win for both the SME and the lender.

Being able to give both lenders and consumers a cohesive perspective is just one of the great things about embedded finance. Because the lender is integrated into the accounting tool, they have a 360° view of the SME’s finances and can save money by doing KYC and AML checks once only. In turn, the more accurate data translates into more accurate pricing, and the efficiency translates into savings for the SME.

Here are some more reasons why embedded finance is revolutionary for SMEs, accountants and lenders:

SMEs can use invoice finance to get a cash injection in days, not weeks

Typically, SMEs leave it to the last moment to look for funding as they’re usually waiting for an overdue payment to come in. Unfortunately, lenders often draw out the process and it takes a lot longer than necessary, causing SMEs even more distress.

Invoice financing with Satago’s embedded finance solution is a little different:

• With Satago, the cash is available in a matter of days, as opposed to weeks. Since Satago is integrated into their accounting tool, we can give them a response almost immediately.
• When they do need invoice financing, the SME can estimate how much funding they could secure by just glancing at one dashboard. Not only does Satago invoice financing reduce the stress of securing funding, but it also takes away the unknown of exactly how much is available.
• There are no hidden fees. Our pricing structure is transparent so you know what costs you’re paying up front: an arrangement fee, a monthly service fee, and an interest fee – nothing else.
• SMEs can start with selective financing and move to full invoice financing when they’re ready. There are no contracts and no obligation to stick with the option they choose initially, meaning they can start with selective financing and only move to financing all their invoices when they’re ready and feel it would benefit them.

Since there’s no more guessing what the gap might be between what they need to borrow and what they can get, there’s no need to leave financing to the last minute, when they know they really should secure it now.

SMEs have full visibility of their debtor book and can easily do credit control

At Satago, we don’t just do invoice financing. We also offer other tools to SMEs that help them take back control of their cash flow. With Satago’s embedded finance function, they have access to all these tools via Sage 50 as well.

SMEs can use Satago to take control of their cash flow and set up customised and automated invoice reminders and other emails like:

• Invoice reminders before the due date.
• “Thank you for paying early” emails.
• Late payment invoice reminders that automatically include late payment fees.
• Grouped reminder emails.

SMEs can completely customise their approach to credit control depending on the customer’s industry, the number of days the payment is late and how long they’ve been a customer for.

This allows SMEs to more easily protect their client relationships, while being able to easily alter the sending schedule to send a certain customer more reminders, or emails with stricter language as time passes.

Read more: Debtor Days Calculator: How to Reduce the Time it Takes to Get Paid

SMEs and accountants can understand how creditworthy a client is at a glance

With our risk insights tool, SMEs can run a credit search and a credit report on a client before working with them.

SMEs and accountants using Satago have a wealth of data available to them that helps them work out how creditworthy prospective and current clients are.

An SME might be working with a company on 30-day credit terms, but when they actually dig into the information available, they see that it’s much more common for the company to pay in 90 days. Knowing this means they can adjust the way they work with them, perhaps sending more reminder emails ahead of the payment due date to increase the chances of it being paid on time.

All of these reports are available in the Risk Insights section of Satago, which is further broken down into:

• Credit search: On this screen you can see reports on existing or prospective clients, including how many days beyond their term they pay on average, and a traffic light system showing how high or low risk they are as a credit customer.

• Analysis: This dashboard shows:
  • Aged debtors: This screen shows how overdue your invoices are in increments of 30 days. You can download a CSV or PDF report showing a breakdown of customers and how overdue they are, hyperlinked so you can easily navigate the system and send reminder emails or set yourself a reminder to call or follow up with them at a particular time.
  • Risk segments: How many customers fit into which risk band.
  • Risk concentration: This combines aged debtors and risk segments, so you could look at how many very high risk customers have invoices 90+ days overdue for example.
  • Largest and oldest open invoices
  • Customer credit summary: How many customers fit into each risk band.
  • Top industry segment concentrations: Which clients are in which sector.
  • Highest risk active customers

• Credit limit breaches: This screen shows those clients who have gone over their recommended credit limit (recommended based on the data held about them and how risky they are). You can also amend this to a custom limit.

You may like: Late Payment Fee Calculator: How to Charge for Overdue Invoices

SMEs don’t have to keep switching platforms to run their accounts

Using multiple tools to manage accounts, invoice financing and credit control can leave SMEs switching back and forth, trying to keep track of where they are with each aspect of their business’s finances.

Very few solutions have everything they need in one place, each solution might only help with invoice financing, or chasing up overdue invoices. But with Satago, SMEs can access quite a few finance tools from the dashboard they are most familiar with: their accounting tool.

How does Satago’s embedded finance with Sage 50 work?

We’ve already explained how our embedded finance offers access to the full Satago suite within Sage 50, which no other accounting tool in the UK can offer – but how do SMEs go about setting it up?

The good news is it’s a quick process that can easily be completed inside Sage 50.

First, the SME needs to make sure their business fits the invoice finance eligibility criteria. They must:

• Be registered with Companies House.
• Have a turnover of £100k.
• Be trading for at least two years.

For the embedded finance proposition, they must also be a customer of Sage 50.

Then they can get started with embedded finance in just a few quick steps:

1. Inside Sage 50, click Apps and add-ons, click Invoice Finance, then click Get Started to load up the eligibility checker wizard.
2. The SME adds some information about their business, such as the company name, business type, company registration number, and annual turnover.
3. The system checks the SME’s details and shows their invoice finance eligibility on the next screen.
4. If they’re eligible, they just need to complete the sign-up process, then they can access Satago through the Invoice Finance option in the navigation sidebar in Sage 50.

This means whenever the SME is logged into Sage 50, they’ll see the Invoice Finance option in the sidebar, which allows them to access the full Satago suite without leaving Sage 50:

1. Invoice finance
2. Credit control
3. Risk insights

Our vision for the future: embedded finance leads to more accurate pricing and transparency

Embedded finance is a revolutionary concept with the capability to completely change the invoice financing game, but it holds lots of possibilities for the future too.

Providers of a variety of financial products and lending solutions can use the real-time data that accounting platforms, and use it to offer many more types of products. We’re starting with invoice financing but there’s no reason why we couldn’t branch out in future to include overdrafts, mortgages, loans, insurance, foreign exchange and more besides.

The result is more accurate affordability assessments, more accurate pricing, clearer fees and an SME owner who can sleep better at night.

In time, we hope our embedded proposition will be used across financial services, to help tie services together, remove the silos lenders are working in and help providers make quick decisions – everything we know consumers are looking for.

Get started with Satago and see the possibilities for yourself

Hopefully this article has given you a good understanding of how we’re shaking up invoice financing in the UK, and how the Satago platform is a cohesive offering for SMEs and accountants who are looking to get back in control of their or their clients’ cash flow.

We’re convinced embedded finance is the way forward for invoice financing, and that this proposition will pave the way for more possibilities in the future as well.

To test the benefits of using Satago for yourself, get started with a 14-day free trial.