Is this the Afterpay of small business?

Is this the Afterpay of small business?

Cloudfloat is one of a number of companies looking to bring buy now pay later to businesses.

When Afterpay was founded in 2015, few could have predicted the impact that it and other buy now pay later providers would have on the consumer payment sector. From 400,000 users in 2016, the sector now boasts over 2 million customers and over 2 million transactions per month.

A similar revolution may soon be on the horizon for small businesses, with startups such as Cloudfloat looking to bring the buy now pay later model to business invoicing.

Founded in August 2018 by Aleem Habibullah, Cloudfloat is in early access, with plans to launch in full by next month. It joins a number of other fintech companies, including Finstro and online lender Prospa, in targeting the invoice finance sector. Marketlend, the peer-to-peer lender, has also announced plans for its own buy now pay later business platform UnLock.

While working in a startup, Habibullah was struck by their struggles around invoice payments. “We were in a joint venture that had been operating for about three months, and had very little cash flow coming in. And one of the things that we noticed was trying to get payment terms for 30 or 60 days proved to be quite difficult,” he told Finder.

“My thinking was that if an intermediary could step into that transaction and provide the supplier the risk assurance and cash flow liquidity immediately, they can supply the goods and the other party can get the payment terms they badly need.” As that intermediary, Cloudfloat would pay the supplier upfront, then let the other business repay the amount over set instalments.

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