• Tungsten Network Finance - Should The Invoice Finance Sector Watch Out?

    I was intrigued to read Motley Fool's post (15/08/17) about Tungsten Corporation PLC (and their recently launched invoice financing service), which said it was firmly on their list of stocks to avoid. I had heard about the Tungsten Network Early Payment product in the recent past as they had added this invoice financing option onto their supplier payment system. This, on the face of it, sounds like a great idea. Businesses using their system to bill customers could opt to use the invoice finance option if they needed an extra cash flow boost - in theory a great way to get the product out to a wider market.

    Tungsten Network Finance

    So I had a look at the accounts at Companies House to 30/04/16, which show overall revenue of £26.1M for the PLC but an operating loss of £28.3M. The interesting part is when you start to look at the comments about the invoice financing arm. From what I can see the Tungsten Network Finance part of the business, that includes the supply chain finance business) recorded only £14K of revenue itself, and a resulting loss before tax of just over £4M.

    Why Hasn't It Grown?

    So why hasn't it grown as planned? The FT reported an ambition to finance $100 billion of invoicing per annum back in June 2014. When you look at the comments in the accounts to April 2016, it says that of the £133BN of invoicing transacted through Tungsten Corporation PLC, the invoice financing product was apparently available to only 4,000 of a potential 200,000+ suppliers using their network. Even that is a large number when compared to the low number of invoice finance users in the UK.

    The comments in the accounts then go on to say that they are re-engineering the product to "make our financing more competitive, redesigning and relaunching our supplier portal to more effectively promote financing". This suggests that maybe the pricing has not been that keen but, "more competitive" could refer to many aspects of their offering.

    Watch Out?

    So the current position is that they have not managed to capitalise on the huge opportunity that their network of suppliers presents. I am sure any invoice financier would be delighted to have such a captive audience of supply chains to mine for new clients. However, the opportunity is still there for Tungsten, and if they did manage to roll out a financing option to a wider number of customers they could become a huge player in the invoice finance market. The FT reported their ambitions on the 15/06/14 as wanting to finance $100BN of invoicing per annum, clearly they have failed to achieve that and have a way to go from where they are, but definitely a company for the UK invoice finance industry to watch.

    Supply Chain Finance

    If you need supply chain finance please speak to Sean on: 03330 113622 for a discussion in confidence.

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