Jared Lynch
8.2.2022
Cloudfloat and ezyCollect strike global deal in latest buy now, pay later partnership
The Australian
https://www.theaustralian.com.au/business/financial-services/cloudfloat-and-ezycollect-strike-global-deal-in-latest-buy-now-pay-later-partnership/news-story/5ae50e898260d48bb82932cc27e65316

A crowded buy now, pay later sector is creating fertile ground for partnerships and deals of all shapes and sizes with one aim – disrupting the big banks.

Cloudfloat – a buy now, pay later platform for business to business transactions – is partnering with Sydney-based fintech ezyCollect in the latest big deal in the BNPL sector aimed at heaping pressure on the big banks as well as a potential launch in the US.

EzyCollect, which manages more than $12bn in receivables, has appointed Cloudfloat as its payment option for small and medium-sized businesses.

It underscores the scale of the disruption facing the big banks, which were the target of federal government criticism at the start of the pandemic over their handling of a Covid-19 business loan scheme. Meanwhile, nimbler fintechs have pounced on the banks’ turf, attacking their much bigger rivals for taking too long to distribute funds.

EzyCollect, founded by business partners AJ Singh and Raj Kuckreja in 2015, dealt with more than 350,000 Australian businesses in the past year – a customer base Cloudfloat expects to piggyback on.

Cloudfloat founder and chief executive Aleem Habibullah said the deal would allow the company to pursue its international expansion by tapping into ezyCollect’s network, spread across 18 countries.

“It will put Cloudfloat in front of ezyCollect’s customers globally, with receivables of over $12bn, as an easy instant payment option for their outstanding invoices,” he said.

“The timing is perfect. In December we boosted our annual transaction capacity to $350m by securing a $30m debt facility from Aura Group. Being part of ezyCollect’s selected offerings to its huge customer base is the perfect platform from which to fuel our next phase of rapid growth.

“We are looking forward to growing our transaction volume by capturing a greater proportion of the available $12bn in receivables. To achieve this, we will focus on strengthening our relationship with ezyCollect by extending our range of partnership products designed to make cashflow instant.”

While Australians have flocked to the concept of using $1,000 with repayments spread across multiple instalments, businesses have now cottoned onto the concept as a way of dodging controversial supply chain financing providers.

It comes as the BNPL sector is being flooded with new entrants of various sizes, setting the stage for consolidation and a flurry of deal making or partnerships.

Latitude, led by career banker and former Australia Post CEO, Ahmed Fahour, started this year’s merger spree last month, acquiring Humm’s BPNL business for $350m.

“There’s a lot of interesting smaller players, but really they’ve got to get out there and compete and it requires investment, longevity and stability,” Mr Fahour said last month.

There are now eight Australian-listed BNPL companies, including Afterpay, Zip, Laybuy and Sezzle. There are another three global players, including Commonwealth Bank-backed Swedish giant Klarna and credit card major MasterCard getting in on the action.

Cloudfloat – which has an annual transaction capacity of $350m – allows businesses to pay their suppliers on time, spreading out the cost via instalments in a similar way to Afterpay or Latitude Financial.

Cloudfloat will offer ezyCollect’s customers 30, 60 or 90-day payment terms as one payment option through its platform.

Mr Habibullah said Aura Group and ezyCollect were highly selective about the businesses with which they partnered, which is a “great vote of confidence in Cloudfloat’s model”.

“Both Aura, in providing us with a substantial debt facility, and ezyCollect in making us part of their payment ecosystem, have provided both the transaction capacity and a clear client recruitment pathway to ensure a strong growth curve. As we enter the new year, we are now fully equipped to scale up.”

EzyCollect director and co-founder Arjun Singh said they are “delighted to have recruited Cloudfloat as a key service provider on our platform”.

“Customers on our platform can choose between traditional finance, bank transfer, credit card and now Cloudfloat to settle outstanding invoices immediately.

“Their reputation for low counter-party risk and high client satisfaction levels is entirely consistent with ezyCollect’s approach to supporting our SME clients to get paid faster and grow their business.”