What is
Crowdfactoring?

Crowdfactoring is a short-term financing solution where a business sells its accounts receivables (i.e invoices) in exchange for cash flow solutions from multiple individuals (investors). Many SMEs try to reach out to banks for financing but are unable to meet their strict requirements. Crowdfactoring opens up more funding opportunities for these SMEs so that they can carry on with their business operations without having to struggle financially.

Why do we need Crowdfactoring?

The percentage of accounts receivables past its due date are on the rise. For SMEs which are cash-flow intensive, this could put them out of business. Factoring is therefore essential for the economy, as it provides short term financing solutions to companies who suffer from past due receivables.

In 2018, more companies in Singapore are expecting more overdue payments from their B2B customers.

  • The average registered payment terms in Singapore is 25 days.
  • B2B creditors in the chemical sector have longer payment terms (31 days on average).
  • Suppliers in Singapore reported that customers in the manufacturing industry and those in construction sector generated some of the longest payment delays. B2B customers in these sectors, paid on average 32 and 41 days late respectively.
  • The main reasons for payment delays in the construction sector were the same as those reported in the country overall: insufficient availability of funds and disputes over the quality of goods delivered and services provided.
  • 20% of SMEs applying for loans over the past 60 months reported being turned down, and 45% of those denied said they had been rejected more than once.
  • 23% of SMEs denied a loan didn’t know why they had been denied.
  • Primary reason why SMEs are denied a loan from the bank is because of their Business Credit Score, which ranks businesses accordingly to their likelihood of making on-time payments based on their personal and business credit history.
  • Overdue B2B invoices seem to have impacted most businesses in Singapore; only 26.1% of respondents said that late payments have not caused any changes for their businesses. Of those that reported changes, 34.7% said that they needed to take specific measures to correct cash flow and 29.0% said that they needed to postpone payments to their own suppliers.

34%

Respondents in singapore said that payment delay caused them to take additional
measures to meet their cash flow

Why should I adopt Crowdfactoring?

Crowdfactoring benefits all parties involved. It is a competitive form of investment,
as well as a more flexible financing solution for SMEs.



TYPES OF INVESTMENTS



  PITFACTOR Endowment
plans
Stocks/
Equities
FOREX
Returns Medium Low Unquantifiable Unquantifiable
Risk Level Low Low High High
Commitment Term None High Low Low
Barriers to Entry Term Low Low Medium Medium
Effort Low Low High High
Additional Charges None Medium Medium Medium
  Crypto
currencies
Gold Investment
Funds
Banks (FDs)
Returns Unquantifiable Low Medium Low
Risk Level Unlimited Low Medium Low
Commitment Term Low Low Medium Medium
Barriers to Entry Low Low High Low
Effort Low Low Medium Low
Additional Charges High Low High Medium


TYPES OF LOAN



  PITFACTOR Factoring Companies P2B Companies Banks
Additional Charges No Yes Yes Yes
Early Repayment Payable interest pro-rated N.A N.A Penalty Fee
Late Repayment Late payment fee
+
Late payment interest
Late payment fee
+
Late payment interest
Late payment fee
+
Late payment interest
Late payment fee
+
Late payment interest
Eligibility
  • • Incorporated for at least 6 months
  • • 50% or more shareholdings effectively held by Singaporeans/ Singapore PRs
  • • Sole Proprietors/ Partnerships/ Private Limited Companies
  • • Singapore-registered
  • • At least one large customer
  • • Annual turnover of S$250,000 - S$500,000
  • • Min. 6 months operating history
  • • Operating for 1+ years
  • • Annual revenue of S$100,000 – S$250,000
  • • Min. and max. financing amount of S$1,000 - S$500,000
  • • Min. 3 years business operation
  • • Min. turnover of S$750,000 – S$1,000,000
  • • 50% or more shareholdings effectively held by Singaporeans/ Singapore PRs

Is Crowdfactoring safe?

Uncollectable B2B receivable in Singapore Singapore
(% of total value of B2B receivable)


Total credit sales in 2017: 45%
2016: 55%

Default Risk of B2B receivable in Singapore


In 2017, the risk of suppliers defaulting on payment in Singapore is 1.9%. This is lower compared to the 2.1% default risk in Asia Pacific. Thus, factoring is a low risk form of investment that more people should consider looking into.

Where did Crowdfactoring originate from?

Factoring is a form of business credit monopolised by banks and traditional factoring companies that has been around and used for hundreds of years. It is a financing vehicle that allows companies to use their receivables to secure the working capital needed to fund their operations. This rich industry once controlled by banks and traditional factoring companies is now open to all as a form of lower-risk investment through Crowdfactoring!

With Crowdfactoring, the banks and traditional factoring companies are replaced by retail investors like you and me, who each invest a comfortable amount of money according to their investment appetite into an invoice to fully fund the SME.
Pitfactor therefore is the platform which opens up this brand new and innovative way for investors and SMEs to benefit each other!