Partner Article

Credibility Counts

April has been another good month for Platform Black equalling our best ever month for number of new clients taken on. This is great and it is really exciting to be part of a fast growing business which is both funding responsibly and yet being so commercial and importantly quick in responding to client’s needs. However, this month, I am even more excited by the move forward we have taken in creating huge credibility for ourselves within the financial services arena that continues to be attacked for not necessarily lending responsibly. Some of this is fear of business being diverted away from ‘mainstream’ lenders to ‘alternative’ funders like ourselves (a fear I think is misguided as there is room for us all to sit comfortably alongside each other) however, as I have said before, we do all have a responsibility to ensure we are providing funding wisely and appropriately.

Before I reveal what Platform Black is doing I wanted to talk about the importance of credibility for any new funder or new type of funding that emerges. I had a meeting this month with a publisher in the receivables sector and he said that 2 years ago he spoke at a conference when he said that the biggest problem the new P2P lenders faced was credibility. He felt then, and still does now, that without establishing that credibility, we (as in P2P funding platforms generally) would always be surrounded by a certain level of mistrust.

So how does any funder create credibility? I think there are several clear ways:

• Work out what your core business is and stick to what you are good at: dipping your funding toes into areas where you haven’t got the expertise, or haven’t brought the relevant expertise in, means mistakes with funding decisions could easily be made and credibility lost.
• Ensure your messaging is clear and consistent: Credibility grows as you consistently spread the message of responsible funding – however it can be lost in an instant with the wrong messaging or with a level of losses that contradict your messaging.
• Be brave – we all want volume, however sticking to your guns and not giving in to lowering your criteria in order to get the sale will ultimately pay off with lower defaults, a better bottom line and increased credibility – which in turn leads to increased business.
• Be Transparent: in every way there should be a transparency of fees and charges. Clients and introducers finding out about hidden fees only once a client has been taken on can only reduce credibility and ultimately trust.
• Put your money where your mouth is – and here is where Platform Black have made two ground breaking moves:

From 1st June Platform Black will underwrite the first 10% of every auction on our platform, thus taking the first 10% of any capital loss suffered by an investor on future invoices funded on our platform. This move demonstrates our belief in our own due diligence and our commitment to treating investors fairly. Given that we have funding lines from as little as £5k to as high as £10 million, this could potentially be a considerable sum and has not been a decision taken lightly. This undertaking is being underwritten by our parent GLI Finance adding even more weight and credibility to this move.

Secondly, from 1st July, we will take a 1% financial interest in every single invoice auctioned on the Platform – we will be the first to invest in every invoice from our own money. Our MD, Caroline Langron has always said that if she wouldn’t put her own money into something then she wouldn’t expect an investor to either so we will be doing exactly that.

This market leading move by Platform Black is testament to our continued belief in our underwriting and our fantastic team here who move heaven on earth to get clients on board quickly, but ultimately responsibly. In the last 12 months we have had zero defaults, which is testament to our experienced risk team, however as anyone knows in Invoice Finance, at some stage we will have a default, but from June onwards we will personally take that hit along with our investors on the platform.

I look forward to seeing how many other funders follow suit and put some skin in the Game!

This was posted in Bdaily's Members' News section by Helen Mackenzie .