Velotrade, the first Account Receivables Financing Platform in Hong Kong to obtain a Type 1 Regulated Activity licence by the Securities and Futures Commission, is now ready to provide leading institutions with access to new investment opportunities in this steadily developing alternative asset class.
Since commencing operations in 2017, Velotrade has handled cross-border financing deals in Hong Kong, China, Singapore, Taiwan and Vietnam with automotive; electronics manufacturing; brand name supermarket chains; and leading garment industry players. Now the company is set to deliver Receivables Financing solutions for increasingly large scale local and international transactions, backed by the reassurance provided by Hong Kong SFC approval.
“Obtaining an SFC Licence is proof of the quality of our platform and service – plus a reassurance for investors and invoice sellers alike who depend on our reliability,” said Vittorio De Angelis, Executive Chairman and Co-Founder of Velotrade.
“Previously, internal risk management rules would prevent many institutions from investing in Account Receivables, but our SFC licence means they can now benefit fully from Velotrade’s access to an alternative asset class that provides them with a further portfolio diversification opportunity. As a direct result, Velotrade is looking forward to a period of rapid expansion.”
Account Receivables Financing has seen growing appeal as one of a range of alternative assets available to investors looking for better returns in the low interest rate environment since the 2008 global financial crisis. Offering a high degree of reliability, strong yield and low correlation to equities, investment in Account Receivables has gradually developed in popularity among institutions in the major financial markets.
“Our extensive discussions with institutional investors have proven that they want a flexible approach to generating healthy rates of return from their cash reserves by using an investment vehicle with minimal risk. Since Velotrade’s platform meets all of these requirements without the need for a long term capital commitment, our team has seen interest from a wide cross section of the investor community including global long-only institutions, hedge funds, family offices and qualified HNWIs (High Net Worth Individuals),” said De Angelis.
Hand-in-hand with growth in demand from investors, Velotrade is also seeing a rising level of demand among enterprises of all sizes which need a channel to sell their invoices in order to finance day-to-day business activity. According to an Asian Development Bank report, banks and other traditional financial institutions have shown a growing reluctance to provide trade finance to small and medium size businesses because of the complexity of anti-financial crime due diligence and the perception of low returns on financial support from smaller firms. As a result, the global trade finance gap was reported to be as much as USD 1.5 trillion in 2017.
“FinTech is becoming mainstream and traditional financial institutions can no longer ignore the efficiency improvements offered by new market entrants,” said Gianluca Pizzituti, CEO and Co-Founder of Velotrade. “Technology is playing an ever more important role in shaping ‘old school’ financial service product offerings,” he added. “For example, the recognition of virtual banks by the HKMA (Hong Kong Monetary Authority) and the establishment of E-Trade Connect, a Trade Finance Blockchain-based platform – initially intended for traditional banks and soon afterwards for alternative players like Velotrade. Moreover, regulators have accepted the importance of the role Fintech is playing and the SFC’s regulation of Velotrade’s online platform is further confirmation of this trend.”
Velotrade enables corporates of all sizes to meet their cash flow needs by more rapidly monetizing unpaid invoices. Qualifying companies upload their outstanding bills that they need to turn to cash onto Velotrade’s online platform where approved investors bid on individual invoices. Once the bidding process is complete, the invoice seller receives immediate payment of typically 80%, minus platform costs, with the balance payable once the debtor makes the final settlement, less a yield to investors.
“Traditional financing channels have become increasingly hard for SMEs to access in recent years, making cash flow and working capital management much more difficult and a real hindrance for businesses striving for growth,” added Pizzituti. “Now Velotrade offers easy access to the digitization of supply chain finance, helping Hong Kong companies to efficiently monetize their unpaid invoices and unlock cash that may otherwise only be in accessible in about two months — or in many cases, much longer.”
Velotrade’s internet-based platform incorporates modern technologies to create efficiencies in the approval process that expedite financing. Credit risk assessments on debtors are supported by the expertise of Euler Hermes, a global leader in trade-related insurance solutions. Additional identity verification and due diligence is conducted via the same technology platforms used by banks, meeting today’s strictest compliance standards.
Velotrade is an Internet-based platform for businesses of all sizes to finance their cash flow needs using their unpaid invoices. Recognising that unpaid invoices represent a financial asset, businesses can use Velotrade to access funds by securing advance payment from participating investors on their outstanding invoices. Companies apply for inclusion on the Velotrade platform and upon approval may upload invoices for investors to finance on a per-invoice basis.
Using the latest-available technologies to conduct comprehensive credit analysis and incorporating modern compliance procedures, Velotrade’s platform is an efficient and rapid means for companies to obtain financing to meet their cash flow imbalances. Learn more at www.velotrade.com.
Backed by a Type 1 SFC licence, Velotrade provides leading financial institutions with access to new investment opportunities in the developing alternative asset class of Account Receivables Financing.
The company is based in headquartered in Hong Kong where it is regulated by the Securities and Futures Commission (SFC).
Mark Leeper, Newgate Communications