- 10 Oct
Natwest Rapid Cash Integrated With Xero Accounting Software
Natwest have announced that Natwest Rapid Cash has been published on the Xero App Marketplace (posted on LinkedIn).
Xero is subscription model cloud based accounting software. Xero was founded in 2006, based in New Zealand, and as at Feb 2019 had 1.8M subscribers worldwide (according to Accountancy Age). As at 10/10/19 Trustpilot shows Xero with an average 3.9, out of 5 stars rating across 1,727 reviews.
Integration Of Invoice Finance With Accounting Software
There have already been several invoice finance companies that have produced software that integrated directly with your accountancy software e.g. Close Brothers Invoice Finance with their IDeal invoice discounting product, and Intelligent Cashflow from Investec. These services will integrate with a variety of different accounting packages, and remove the need for bank reconciliations. There are other services that will take data from your accounting software, but perhaps without the full end to end delivery of a funding service without the need for a reconciliation.
The Natwest approach is slightly different in that they are potentially seeking to connect with a wider audience as their invoice financing appears as an option to users of the Xero accounting package - an innovative approach. It allows them to offer funding at the point that a customer is thinking about their finances, having raised invoices that are not yet paid.
Rapid Cash is available to Limited Companies and LLPs with a turnover in excess of £100K pa, and at least 6 months trading history. This will rule out smaller businesses, however there are plenty of alternative funding services that can help them.
It apparently integrates seamlessly with Xero so that customers can borrow against unpaid sales invoices. Prepayments are apparently up to 85% of the unpaid invoice values, with the initial facility application decision approved within 24 hours. The whole process is digital, even the signing of the agreements. The 85% prepayment is reasonable, although for some sectors there are higher prepayment levels available via other services.
Customers pay cash into a specified Rapid Cash account (a trust account). Although property as security is apparently not required, a debenture is required, which is similar to many similar services.
Rapid Cash Pricing
The article suggests that pricing is between 4.5% and 8.8% over base rate (base rate is currently 0.75% at the time of writing) - so between 5.5% and 9.55% in total (at the time of writing), with interest calculated on a daily basis. There are apparently no other fees. This issue will be the proportion of applications that are approved for this type of funding (and the number that are declined), and the place on that pricing scale that they end up being costed.
Whilst the lower end of the pricing scale is very fine, the key will be whether your company is able to access those lower rates. Many invoice finance providers are likely to be able to offer similar rates along that pricing spectrum, but individual circumstances are always the most important driving factor of price. Before committing to any costing, it is worth checking invoice finance rates against the market.