FundThrough Inc. has spent the past seven years creating a new category of financing: instant payments for companies selling to larger businesses. The Toronto-based financial technology company has helped thousands of small businesses get the capital they need to grow.
FundThrough’s technology-enabled invoice factoring platform enables B2B (business to business) companies to bridge the natural cash flow gap that can exist when they invoice large customers and have to wait to get paid. Instead of sitting around for weeks or months to access money they’ve already earned, FundThrough funds the invoices, typically with a cost similar to accepting credit cards — about 2 to 4 per cent.
The service empowers companies to control when they get paid without impacting customer payment terms. It means their hard-earned money is readily available to invest in their business.
“We wait so you don’t have to,” says FundThrough chief executive officer Steven Uster, who co-founded the company in 2014 with Deepak Ramachandran and Graham McBride.
An example is Steel River Group, an Alberta-based Indigenous-owned and operated construction and service management firm, which in 2019 landed a huge $50-million contract.
At the start of the project, the customer agreed to pay Steel River within 15 days. The quick turnaround enabled the company to keep buying supplies, pay subcontractors and meet payroll. But the payment terms suddenly changed from two weeks to several months. As a startup, Steel River didn’t have a lot of cash on hand, nor could it boost its line of credit with the bank.
After hearing about FundThrough, Steel River was immediately intrigued by the idea that it could quickly receive cash for its outstanding invoices. After going through the process with FundThrough, Steel River had the money it needed in its account within 48 hours.
“There is definitely peace of mind knowing that if the client doesn’t pay the invoice, we can factor it, and we can make our payments,” says Steel River’s finance lead Kevan Mikkelsen. “We were able to complete jobs solely through the support of FundThrough. With FundThrough in our corner our growth accelerated.”
Mr. Uster says FundThrough was created to solve financing challenges like this for hard-working and expanding small business owners.
“We saw this uneven playing field where small businesses were at the whim of their much larger customers in terms of when they got paid,” Mr. Uster says. “As a small business owner, you do everything you’re supposed to do; you deliver the goods, you perform the service, and your customer decides they’re going to take 60 or 90 days to pay you. We don’t think that is fair.”
FundThrough has grown from just five employees when it started to more than 60 today across North America. The company has funded $1-billion of invoices for several thousand businesses to date.
One of the benefits of FundThrough, Mr. Uster says, is that it’s not a loan and there’s no need to give away equity in the company. “With FundThrough, you don’t have to worry about how or when you’re going to repay the funds that FundThrough advances, because you know the natural payment event is when the invoice gets paid,” he says.
The next focus area for FundThrough is embedded finance, Mr. Uster says, adding that partnerships with platforms like Intuit QuickBooks have always played a key role in reaching small businesses. He says FundThrough is well positioned to become a leader in offering seamless invoice funding experiences directly in B2B marketplaces, enabling buyers to maintain normal payment terms, while getting suppliers paid immediately.
Mr. Uster says his company has helped accelerate the growth of several companies on the Globe and Mail’s Top Growing Companies list and, like its clients, continues to expand.
“FundThrough makes it simple for you to do what you do best — which is go out and sell,” he says.