It’s time to shake up payment terms
What if DCB and value-added services could get faster pay-outs? Now that would be a game changer. Well, Lenderwize is looking to do that and reshape the whole sector at the same time. Jarvis Todd reports
One of the biggest hurdles faced by DCB providers has been the long pay-out times. In many cases it can be 60, 90 or even 120 days plus to see cash filter down the “operator-aggregator-publisher” value chain. But this problem is not limited to DCB; it is a problem across the whole digital content industry. The Telemedia value chain is a complicated web of connections, each with their own payment terms and times and it can take many weeks for money to arrive at its final destination. This restricts the industry in several ways. Primarily, it reduces available capital for reinvestment in content, services and marketing. Following disruptions to earnings or with the usual season run of peaks and troughs of consumer usage, it can be difficult to promote and create without access to funds – funds that you know you have, but which you can’t yet get your hands on.
“Telecoms wholesale operators need cash; it’s a very capital-intensive business and we help this by providing more working capital by mitigating risk and managing how they get paid,” says Lenderwize Founder Lawrence Gilioli.
“We also help investors invest in telecoms safely and securely – bringing both more capital into the sector and helping businesses have working capital.”
Another problem is that, for many exciting potential sectors DCB just doesn’t look that great versus alternatives like credit card – where both fees and delivery times are simply more attractive. In fact, it could be argued that DCB has done very well to find new use cases in gaming and other services despite all these limiting factors. However, this could all be set to change as fintech companies [like Lenderwize] enter the premium content arena with an accelerated payment proposition that works for everyone.
The Lenderwize’s platform provides investors with proof of service by sharing characteristics for each commodity such as call duration, origin, destination, and cost. It verifies this data in real- time to validate the services rendered on each invoice. They recently secured €100m in funding from investment firm Fasanara.
“We were created to do this in the voice market, where we have been very successful. Now we are expanding invoices payment acceleration to the wider digital content market,” explains Senior VP Bus Dev, Faissal Houhou from Lenderwize.
“We created Lenderwize to essentially make sure that aggregators and telcos get paid rapidly for invoices, free them up to invest quickly in marketing and services to keep on growing and expanding. Now we are offering the same service across content, publishing, DCB, SMS, marketing and advertising and more.”
Targeting aggregators and telcos – as well as direct to content publishers, the service aims to pay out on invoices within 48 hours of issue and then collects the money down the line, minus a small fee of course.
“For example, consider a content publisher in Spain doing business through an aggregator in the UK. We would take the invoice and pay the publisher and then collect the money from the aggregator when it came in, minus a percentage of between 1.5 to 1.9%, depending on the size of the bill and the size of the company,”
says Houhou.
“We are essentially giving funding for a fee, but with a lot of extra security and surety for all parties.”
DUE DILIGENCE
What makes the service attractive is that it can offer rapid funding and excellent cash flow to business, as well as removing much of the risk associated with the payments chain.
“We ask to see all the invoices and our AI does all the due diligence and looks at the risk before we issue a contract and work with anyone,” says Houhou.
“We are also totally insured, so for the companies that use us, it’s a good way to manage risk.”
NEW SERVICES
While many of its existing premium voice clients are on board, Lenderwize is also seeing airtime top up brands using it. The company is also actively courting DCB providers and MNOs to help them create new services that could potentially be easier to sell to customers as they can provide much better pay out rates.
“DCB providers could benefit from offering rapid payout rates to customers, while MNOs could create new services for aggregators again based on more rapid payouts,” says Houhou.
“Gaming companies too are interested as they can get the money from DCB in-app purchases and Google ads more rapidly.”
It seems like years ago that factoring was a big part of the international audiotext industry, but in recent years the lack of high-profile brands [promoting this service] has been notable – partly because bigger operators were opting to do it for themselves (funds permitting). However, when you consider that this is a relatively low-risk way of getting paid quickly, it’s now no surprise to see a raft of companies revisiting the benefits and signing up .. so watch this space because payments might just be about to get whole lot quicker.
