Don’t switch! Lenders, step up your current products with Open Accounting

The good news?

Dancerace lenders don’t need to start using a new facility type like eSync to harness the power of Open Accounting. Instead, lenders can add Open Accounting technology to their existing products with minimal effort. And the rewards are massive.

In this article, I’ll show you how lenders can improve their current invoice discounting and factoring facility types in their Dancerace OS, using our Open Accounting features. I’ll do that by describing the difference between the two products with and without Open Accounting technology, and the benefits for clients and lenders in both cases.

Before we begin

One of the major concerns that lenders have about implementing Open Accounting for their lending products is that technology or implementation issues will negatively affect their clients. It’s an important point.

The Dancerace Customer Success Team offers dedicated, structured support to all lenders implementing our Open Accounting features – before and after implementation – to ensure theirs and their clients’ experience is a good one.

Our Open Accounting technology is powered by API experts Codat – a business dedicated to maintaining the highest level of compatibility and connectivity to client accounting systems. Today, 75% of our lenders in the APAC region use our Open Accounting features, with the number of European banks and lenders growing everyday.

Finally: by switching ‘on’ our open Accounting features, clients will still have the option to revert back to uploading CSV ledgers at any time, should they wish. We’re confident, though, that they won’t want to. Here’s why.

Bulk Invoice Discounting & Open Accounting

How does it work today?

For bulk invoice discounting facilities, clients upload their management accounts data to their e3 Client Access system at the end of each month. Their lender then performs a reconciliation on the figures provided.

How does it work with Open Accounting?

Clients connect their online or offline accounting system to their e3 Client Access system once, and do a simple, one-time customer-matching exercise. After that point, they’re no longer required to compile and upload their accounting data, as this data (and more) is ‘extracted’ from their accounting system automatically, whenever required.

That’s it. Now, their lender can ‘pull’ a rich range of financial and management information from the client’s accounting system at any time. The lender’s client management and risk teams can drill into and analyse this latest client data at any point in the month using the Insights tool in our c3 Backoffice Control system.

Note: Clients can also opt to ‘trigger’ their ledger upload manually, giving them additional control over their facility.

What’s the upside for lenders and clients?

Switching on Open Accounting technology for bulk invoice discounting facilities means less work for borrowers and greater visibility, reduced risk and greater efficiency for lenders:

• Clients no longer need to compile and and enter or upload their management account data each month, saving them time and effort. And lenders don’t have to ask for this information!
• With Open Accounting, lenders have much more data than was previously available, taken directly from their clients’ accounting system. Our Insights system in c3 Backoffice Control displays clients’ ledger data, to invoice-level; financial performance data, including sales and purchase analysis, contras, and YTD sales and purchases; and management information, including P&L.
• This data is updated every time new data is pulled from the client’s accounting system. This means lenders have access to clients’ latest financial and management information throughout the month – something not previously possible with traditional invoice discounting facilities. Lenders can track movements on clients’ ledgers throughout the month and spot and deal with issues, fast. Previously, they would have to wait until month to get access to a more limited dataset from the client, at which time issues on the client-side may have developed into major risks for the lender.
• Lenders have access to higher-quality data than before, which reduces their risk further. Unlike traditional invoice discounting scenarios where lenders rely on clients to provide accurate financial data, lenders using Open Accounting data work with clients’ own financial records, stored in their online or offline accounting system. Clients are therefore much less likely to provide fraudulent data to their lender.
• With access to clients’ latest financial data throughout the month, lenders can work smarter. Lenders can perform reconciliations, manage reserves and conduct risk reviews on an ongoing basis, instead of tackling this type of activity for all clients at the end of the month.

Factoring & Open Accounting

How does it work today?

Clients upload their management accounts data to their e3 Client Access system each week. Lenders may also ask clients to submit bank statements on a regular basis.

Lenders then manage allocations, reassignments, discounts and write-off’s on a rolling basis.

How does it work with Open Accounting?

As with bulk invoice discounting, clients connect their online or offline accounting system once and do a simple, one-time customer-matching exercise. Clients no longer need to compile and upload management accounts data. Instead, their lender pulls this information (and more) from their accounting system when required.

Lenders manage their client’s facility as before, with increased visibility of their client’s financial and management information. (See next section.)

Note: Clients can also opt to ‘trigger’ their ledger upload manually, giving them additional control over their facility.

What’s the upside for lenders and their clients?

By switching on Open Accounting for their factoring facilties, lenders save time, effort and risk, while their clients are required to put in much less time to maintaining their borrower account:

• Clients don’t need to collate and send their ledger data to their lender on a regular basis. This represents a massive time-saving – even more so than with an invoice discounting facility, because clients are required to upload more often. Better still, lenders don’t have to chase for the information, or audit it!
• Lenders have access to higher-quality management and financial data on each connected client, using our Insights tool in c3 Backoffice Control. Factoring facilities are already data-intensive, but Open Accounting offers even more data than lenders gather today.
• This can save lenders from having to collect other datapoints from clients. For example: many lenders ask their clients to provide bank statements on a regular basis, to allow them to check for wrongly-closed invoices. (Some lenders even collect Open Banking data to show the same.) The status of each invoice is information stored in clients’ accounting systems and is therefore displayed in our Insights tool in c3 Backoffice Control, too. As a result, lenders can check for irregularities in open and closed invoices without having to contact their client. Better for both parties!

A lighter way to level up

Lenders using the Dancerace OS don’t need to reinvent their products and processes to access the benefits of Open Accounting. By switching it ‘on’ for their existing facility types, they can work smarter, lower their lending risk and improve their borrower experience.

Small change; significant step up. If you’re a Dancerace lender looking to understand how Open Accounting can benefit your business, contact our Customer Success Team. And if you’re new to Dancerace but would like to explore how our complete, connected ABL OS can transform your business, get in touch.