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Whilst you could maybe set up a monthly payment plan for your customers, that leaves you very exposed to them not paying. Assume you have three or four customer

Whilst you could maybe set up a monthly payment plan for your customers, that leaves you very exposed to them not paying. Assume you have three or four customers on a payment plan, and they decide not to pay, you could be out of money for the month, not be able to complete other jobs, etc. Also, there are legal obligations and restrictions in place for these types of agreements as well. With us, the tradesperson has no risk of non-payment. They are paid the full amount on completion.

edoceo 6y ago
So, how do you deal with the risk of non-payment?
- RobKanda 6y ago
  The bank we offer the finance through run full credit checks and assess the risk. Non-payment is only tied to our lending bank, the tradesperson isn't at risk. If the customer is a risk of non-payment, the bank will elect not to lend to them. For the tradesperson, we'll let them know if the customer has been rejected for finance, and they can choose to proceed with the work and hope the customer can pay them if they choose, or decide the customer isn't worth the risk
  - thaumasiotes 6y ago
    > If the customer is a risk of non-payment, the bank will elect not to lend to them. This seems a little glib. Everyone is a risk of non-payment. I have total confidence that over ten years of operation, there will be at least one occurrence of non-payment. If you're actually providing 0% financing -- you pay the tradesperson $X up front and collect $X over the next 24 months -- that would mean you start out being able to employ zero people, and even the most infinitesimal risk of non-payment immediately puts you in the red.
- smashah 6y ago
  There are other companies that you can sell invoices to to get cash instantly that will recoup the money from the client or sell the debt on to someone else (e.g marketfinance.com). Pipe is doing a similar thing but their threshold is $100kARR
- admax88q 6y ago
  Economies of scale?
- thaumasiotes 6y ago
  Presumably by charging more money overall.

edoceo 6y ago

So, how do you deal with the risk of non-payment?

RobKanda 6y ago
The bank we offer the finance through run full credit checks and assess the risk. Non-payment is only tied to our lending bank, the tradesperson isn't at risk. If the customer is a risk of non-payment, the bank will elect not to lend to them. For the tradesperson, we'll let them know if the customer has been rejected for finance, and they can choose to proceed with the work and hope the customer can pay them if they choose, or decide the customer isn't worth the risk
- thaumasiotes 6y ago
  > If the customer is a risk of non-payment, the bank will elect not to lend to them. This seems a little glib. Everyone is a risk of non-payment. I have total confidence that over ten years of operation, there will be at least one occurrence of non-payment. If you're actually providing 0% financing -- you pay the tradesperson $X up front and collect $X over the next 24 months -- that would mean you start out being able to employ zero people, and even the most infinitesimal risk of non-payment immediately puts you in the red.
smashah 6y ago
There are other companies that you can sell invoices to to get cash instantly that will recoup the money from the client or sell the debt on to someone else (e.g marketfinance.com). Pipe is doing a similar thing but their threshold is $100kARR
admax88q 6y ago
Economies of scale?
thaumasiotes 6y ago
Presumably by charging more money overall.