[Fin2B CEO Park Sang-soon]
Fin2B Co., a South Korean fintech start-up, will soon launch a service to help liquidate accounts receivable for small and medium-sized enterprises (SME) at an affordable discount rate, according to sources on Monday. The service is available via online and mobile platforms.
SMEs usually receive accounts receivable from transaction parties, mainly large companies, to secure future payment. But accounts receivable may be paid up to 90 days later, often leading to mismatch in the balance sheet for SMEs.
SMEs which immediately need cash sell their accounts receivable to banks with a discount rate of 3.5 percent on average. Fin2B can play a role in this situation, as it attracts investors who will buy accounts receivable from SMEs by lowering the discount rate to 2.5 percent, for example, helping SMEs ease their financing cost.
Not only institutional investors but also large corporations can participate as investors. The platform can generate a win-win situation as large companies can expect higher return on their investment, while SMEs can get funds at a lower cost.
According to the Bank of Korea’s Economic Statistics System (ECOS), accounts receivable held by SMEs total 175 trillion won ($149 billion), of which 35 trillion won are liquidated and traded at commercial banks. Fin2B expects the market size will reach 80 trillion won if companies outside the statistics are considered.
Fin2B is also working on providing credit loan services using big data occurring from transactions between large and small companies.
Fin2B CEO Park Sang-soon said he will make Fin2B a financial platform to help ease credit crunch for Korean SMEs.
By Chung Ji-sung
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