Making small businesses' dreams come true with cloud

It's a balancing act. Small businesses can wait months for customers to pay them. But the expense of running or growing their businesses can't always wait that long. Invoice financing has long been a way to manage and improve cash flow by turning unpaid invoices into a true line of credit. But many small and mid-sized businesses are underserved when it comes to accessible, flexible financing solutions that can scale as their businesses grow.

Small and medium-sized businesses (SMBs) are the backbone and growth engine of the US economy. They provide jobs for more than half of the nation's private workforce, drive innovation, reflect America's diversity, and often evolve into large enterprises. However, one in every four new businesses does not make it past its first year. And more than half do not survive past their fifth.

With healthy cash flow, SMBs are more likely to survive and thrive. Lenders can help maintain it. But many SMBs – particularly those with revenues between $1 million and $75 million – find themselves in a double bind when it comes to working with lenders. These businesses are either too small for traditional banks or too big for fintech lenders.

SMBs remaining options for unlocking working capital are either too expensive or too intrusive. Predatory lenders charge the equivalent of 50-100% interest for cash advances to SMBs. Traditional factoring companies take over the SMB's accounts receivables servicing – inserting themselves between the business and its customers – sometimes impacting customer relationships. For these SMBs, access to cash can be costly, intrusive to customer relationships, and time and labor-intensive.

InterNex had a vision: to fill the product gap in the lower mid-market and transform secured lending for SMBs. How? By marrying deep financial expertise, cutting-edge technologies, and agile business processes to provide them with flexible working capital financing solutions.

"We started InterNex because we knew these underserved businesses needed more than just money," says Paul DeDomenico, co-founder and chief executive officer, InterNex Capital. “They want technology that makes running their businesses and accessing capital easier. They want advanced analytics and insightful reporting to help them better manage their working capital. They want a lender that can deliver real-time responsiveness and partner with them over time to help their businesses grow."

InterNex planned to deliver revolving lines of credit, collateralized by accounts receivables for general working-capital needs, through an easy-to-use portal that provides SMBs with fast access to cash.

As a startup, speed to market and minimal initial capital outlay were key. So, InterNex needed help to develop and deploy the solution quickly and cost-effectively.

Because of our expertise in digital financial services, operational processes, cloud services, and advanced digital technologies, InterNex partnered with Genpact to co-develop the solution.

First, we built a cloud-based target operating model to:

• Run day-to-day operations
• Review loan applications
• Service and manage collateral
• Apply cash from payments to principal balances
• Manage finance and accounting flows

Next, the team designed Velocity™, an easy-to-use, self-service portal to seamlessly connect customers, partners, and capital providers.

Two key building blocks enabled us to deliver a quick launch at low cost:

1. A digital lending platform: The combination of InterNex Velocity™ and Genpact's Cora ARFlow – a cloud-based solution that helps companies automate their invoice-to-cash processes, including accounts receivables management and cash flow reconciliation – empowers InterNex to efficiently manage its customers' receivables, cash application and reconciliation, and invoice servicing processes. Cora ARFlow also seamlessly integrates with InterNex's bespoke analytics platform to provide real-time data inputs for InterNex's predictive analytics and machine learning tools.
2. A comprehensive cloud-computing platform: As a digital lender, InterNex needed its solution to be cloud-based. Genpact's use of best practices in development operations (DevOps) — which integrates the processes between software development and IT teams — and our advanced-level partnership with AWS enabled seamless delivery on the cloud. Using DevOps best practices helped accelerate the development cycle for InterNex and provided continuous delivery with high software quality. With more than 175 fully-featured services from data centers globally, AWS made it simple, fast, and easy to deploy the portal and manage and scale InterNex's enterprise solution.

Genpact's deep expertise in commercial lending and cloud services enabled us to pull both of these building blocks together on the cloud. Since the launch, this unique mix of expertise and technologies has allowed Genpact to effectively maintain, automate, and extend the solution.

Creating a virtuous cycle
As an SMB generates new invoices, InterNex automatically uploads them to its portal, Velocity™, thanks to accounting-system integration. Eligible invoices create more collateral for the business to borrow against, yielding real-time cash availability. The amount the SMB borrows against the invoices becomes the principal balance it owes. As payments flow in, the cash pays down the principal, which creates more availability.

Winning with data
In the lending world, data is everything. InterNex uses artificial intelligence and predictive analytics to assess historical invoicing and payment data to determine the likelihood of fraud or payment default. InterNex also uses this data to score the SMB's customers algorithmically and determine invoice eligibility.

Offering total transparency
The portal provides SMBs with a dashboard, allowing them to see the status of both their customers' invoices and their credit facility at any time. Unlike other lenders, whose credit assessments take place in a black box, InterNex's solution offers total transparency. SMBs can see how their customer invoices are scored. And with availability, they can draw down and obtain funds in a matter of minutes.

In under six months, InterNex's solution was up and running. It reduced average loan-origination cycle times by almost 40%, bringing customers from application to funding in just five days. And it delighted borrowers with its user-friendly portal, Velocity™. As a result, the fintech grew by 150% annually. in just five years it has delivered more than $1 billion in client funding through the platform.

"Our momentous $1 billion milestone is a testament to the value our solution brings to SMBs across the US," says DeDomenico. "Terrific partners like Genpact have played a key role in our success."

What's more, InterNex provides more than one-third of its funding to women- and minority-owned businesses. "As an Asian and female co-founder of InterNex, I'm particularly proud of the value we have brought to women- and minority-owned businesses," says Lin Chua, co-founder and president, InterNex Capital. "Genpact's expertise in financial services, cloud services, and process operations helped us deliver a superior business model to best service our clients and drive operations at scale."

InterNex's small-business customers are also thrilled. "When we make a draw request with InterNex, we usually get the funds within 10-15 minutes," says John Falcone, chief executive officer and chairman of the board at Falcone Capital Holdings, LLC, a holding company of award-winning, technology-driven international and domestic transportation brands. "Having access to the Velocity™ portal is amazing. It's like having a supercharged accounting system at our fingertips at all times."

Together, InterNex and Genpact deliver working-capital facilities to SMBs with speed, transparency, and ease – allowing them to procure, manage, and draw down on those facilities online, and receive their funds faster.

Going forward, InterNex plans to grow through digital partnerships. It is in the process of integrating its solution into the platforms of SMBs' digital service partners. For example, InterNex recently announced a partnership with UTECH Global, a provider of transportation-management software and electronic-logging devices to US and Canadian transportation companies. With Genpact's help, InterNex will embed its Velocity™ platform into UTECH's to provide a turnkey solution for organizations looking for a better way to manage their transportation businesses while strengthening their working capital.

With each innovation, InterNex is charging toward its next goal – delivering $2 billion in client funding through the platform. Genpact will be right by its side, every step of the way. And together, the sky's the limit.

Visit our commercial industry page.