Beat Syndicate 4242 of Lloyd’s has become the first globally to insure the instant payment of business-to-business (B2B) invoices against dilution risk, creating a new category of insurance for pre-approval invoice payments.
Working with UK fintech Previse, Beat Syndicate, owned by Beat Capital Partners and managed by Asta Managing Agency, is underwriting its first pre-approval invoice payments for a large UK-based buyer and expects to scale rapidly to underwrite invoices globally over the next few years.
Previse invented the instant invoice payment technology that analyses invoice data from large corporations to tackle the persistent problem of slow invoice payments to SME suppliers and enables payment as soon as an invoice is received.
The fintech's InstantPay technology, trained on trillions of dollars of real invoice spending, precisely quantifies dilution risk, i.e. the contingent risk that a large company won’t pay an invoice for legitimate reasons such as it being incorrect or fraudulent, or the goods were not correctly delivered. This risk analysis and risk management, together with a close collaboration with Beat in the development of the insurance product, made the underwriting of this risk possible.
By underwriting pre-approval invoice payments that have been authorised by InstantPay, it is now possible for large firms to have their suppliers paid on the day an invoice is received without ever having to give a formal payment undertaking. At the same time, the firms that provide the early payment funding can rely on the cover provided by Beat with the backing of A rated Lloyd’s security.
Tom Milligan, Active Underwriter of Beat Syndicate 4242, commented:
"Unlocking value in data through artificial intelligence is becoming one of the biggest transformations in the world of insurance. What excited us about this was the opportunity to create a brand-new market, enabling us to support the trillions of dollars of global B2B spend and help solve one of business’s most intractable problems. At the same time, the artificial intelligence developed by Previse provides us an unparalleled level of control over the risk profile of the invoices we underwrite, making it a very attractive insurance proposition."
Phillipp Schoenbucher, Chief Data Scientist and Co-Founder of Previse, said:
"Most progressive business leaders understand that the current trend of stretching supplier payment terms to breaking point is unsustainable and needs to end. But moving from aspiration to reality always brings its own challenges. By working with underwriters such as Beat, we’re able to provide an added level of assurance to the institutions which fund our instant payment schemes. Ultimately, by reducing the risks to their capital, we’re able to even further bring down the costs of instant invoice payments, widening access for the SME suppliers which need this service most."
Previse is rolling out its solution worldwide. It is actively engaged with firms in multiple countries with pilots running in industries as diverse as healthcare, media, and finance. To support this global roll out the company already has offices in three continents.
Bryan Walker, Director of Funding Solutions gave more details on their roll-out:
- The length of relationship with our customers varies considerably. With some, we’ve been engaged since we launched the company; whereas others have moved quite quickly from initial interest through to onboarding in recent weeks.
- We’re now getting suppliers paid on a daily basis and moving quickly to bring more suppliers on-board. As with any new technology, adoption needs to be a process not an event. Clients owe it to their suppliers to roll out gradually to ensure everything works without a glitch and to educate them on this new way to get paid instantly.
Some late payment practices in UK are despicable
Lloyds Bank analysis of government report reveals what is happening; new solutions are needed
AI will drive revenue, profits and shareholder value
Business uses for artificial intelligence are relatively low but in future AI is set to play a much bigger role in creating value
Fintechs gain favour for B2B payments processing
Around three in four banks are seeking to leverage fintech solutions for payments-related services, reports Bottomline Technologies.