The Australian Securities Exchange has been no stranger to fintech start-ups in recent times, with the likes of Afterpay Touch Ltd [ASX:APT], Splitit Payments Ltd [ASX:SPT] and Zip Co Ltd [ASX:Z1P] all notable debutantes.
Melbourne-based payments company QuickFee Ltd [ASX:QFE] made its entrance to the ASX at 12:00pm today.
At the time of writing Quickfee’s share price is sitting at $0.50.
Quickfee: like Afterpay for business
According to the market announcement released yesterday by QFE, the company raised $13.5 million under its replacement prospectus dated 14 June 2019. Under the issue, shares were sold at 20 cents each.
When trading in QFE began at 12:00pm today, shares opened trading at 31.5 cents and quickly climbed to 43 cents in the first two hours of trade.
QuickFee was founded in March 2009 and developed the QuickFee Platform for Australian firms, allowing them to accept monthly payment plans where clients obtain finance online from QuickFee to facilitate invoice payments to the target firm in full.
Following the success of QuickFee in the Australian market, the company incorporated QuickFee in the US in April to pursue opportunities in the much larger market in the US, where no direct competitor exists.
Essentially, Quickfee will operate in the small and medium enterprise lending sector. Like Afterpay, it will provide finance solutions for clients in a buy-now-pay-later format. The key difference being that QFE will be seeking to sign up clients of professional services firms (like PwC or Deloitte) for payment of invoices issued by the firm.
In Australia, the accounting sector accounts for $20 billion in estimated revenue in 2018. In the US, this figure is US$175.4 billion.
The ‘Big Four’ accounting firms in Australia alone brought in $7.79 billion last year, representing a revenue growth of 11.1% year-over-year. In the US, the same firms accounted for US$51.6 billion in 2018 revenue.
QFE generates revenue from selling its services to users by marketing to professional services firms and having them host the QuickFee Platform while recommending the loan services provided by the QuickFee Business to their clients.
Specifically, they generate revenue through five channels: monthly hosting fees, credit card processing fees, rapid settlement of EFT transactions in the US, interest accrued and facility fees through debt financing of client invoice payments, and interest accrued and facility fees through debt financing disbursements and family law proceedings for Australian legal Firms.
QFE’s revenue notably improved in FY2018 from FY2017, with revenue from interest, loan fees and service fees more than tripling.
Total comprehensive income for FY2018 was a loss of US$623,841 compared to FY2017’s loss of US$859,579.
Where is Quickfee headed?
The ever-increasing popularity of online payment platforms is almost certain to continue as they shake up the way in which we finance our purchases.
Though conceived much earlier than Afterpay or Splitit, Quickfee has certainly found a niche that seems much more scalable than its retail consumer-focused cousins.
According to MarketInvoice, a UK lending company, globally 72.5% of invoices are paid late. Australian companies are the slowest at paying outstanding invoices — worse than Mexico, South Africa and the United Arab Emirates.
The average amount of time it takes for an invoice to be paid in Australia is 26.4 days overdue.
Late payments can add financial and administrative costs, reduce potential for investment opportunities and damage business relationships.
A discussion paper from the Federal Government’s Department of Innovation in 2013 noted late payments also create a weakening effect on businesses, particularly small businesses, which compromises their competitiveness and survival.
Given Australia’s poor record of paying invoices, QFE is sure to pique the interest of a lot of firms, particularly small businesses desperate to get what they are owed. Dun & Bradstreet estimated that 90% of small business failures are caused by poor cash flow, and the inherent imbalance of bargaining power means many can be reluctant to pursue late payments for fear of jeopardising future work.
Quickfee will certainly be another fintech to watch over the coming months. It will be interesting to see how many more fintechs will enter into the invoice payments space.
For Money Morning