Specialist peer-to-peer lender InvoiceX is targeting SMSF members to become its next solid segment of investors.
InvoiceX director Dermot Crean said his organisation is specifically looking at the SMSF sector to support its peer-to-peer lending platform as it will give trustees the ability to deploy their cash holdings in a more efficient manner, allowing it to generate an income-based return of around 10 per cent on a short-term basis.
“Self-managed super is quite an obvious one because there is a serious amount of cash there. There is $157.5 billion of cash earning nothing really when you net it off against fees and it just goes up all the time,” Crean told selfmanagedsuper.
“So an incredible amount of money is sitting there unused and everyone’s saying I’d like to get a better yield on this, and then there a lot of companies out there looking for help to grow.
“Up to now it’s been a bit too scary to say let’s put that money into these companies because are you ever going to get it back?
“So I think the obvious one to appeal to is self-managed super but also any superannuation plan because they’re all looking at how to generate a good reliable long-term yield.”
The InvoiceX platform uses a segment of each investor’s capital pool to lend to growing businesses on a short-term basis to assist with their cash flow requirements.
The peer-to-peer lending process involves InvoiceX paying 80 per cent of a company’s invoice immediately, to provide cash flow for expansion on a timely basis, and then being paid back 100 per cent of the invoice when it is paid by the original debtor.
“What we’re interested in is creditworthy businesses,” InvoiceX director Steve Yannarakis explained.
“They have to have a clean credit history and they have to have large customers.
“So companies with large corporate clients such as Citibank or Telstra are the ones we are looking to lend to.”
According to Crean the strength of InvoiceX’s clients is what will generate a robust income stream for SMSF members in their retirement years.
He added the nature of the lending procedures mean investors never have the segment of their cash that is lent exposed for more than 100 days.
The minimum investment amount is $100,000 and all SMSF trustees are required to do in order to take part is set up an individual bank account in coordination with InvoiceX.
Fees charged on the offering are at 2 per cent and InvoiceX will be looking to introduce a unitised version of the product with greater appeal to the retail market and financial advisers in the new year.