Fintech as a growth motor: VAI Trade digitizes German medium-sized companies

Digital purchase financing to provide support for medium-sized companies and traders – a service provided by Berlin-based fin-tech start-up VAI Trade. Small and medium-sized enterprises (known as SMEs) in particular frequently experience short-term financial difficulties in the period between purchasing goods and selling them on. This segment is often unattractive for traditional banks since the sums involved are too small and the periods of time are too short. In response to this, tech company VAI has been offering its customers a transparent financing solution since 2017. Purchase financing is an easy way for companies to extend their payment terms to a maximum of 180 days for goods purchases of up to EUR 50 000, thus gaining short-term liquidity.

Cooperation with strong refinancing partner – VR FACTOREM makes millions available to provide further financing

The growth motor for Germany’s medium-sized companies is on track for success itself, having embarked on a cooperation with VR FACTOREM GmbH.

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In future the wholly owned subsidiary of VR Smart Finanz (formerly VR Leasing Group) will provide the start-up with background processing and risk management assistance as well as making a seven-digit million sum available to VAI.

This partnership demonstrates that the success story which is digital financing services for the business customer segment is set to continue.

“We were very impressed with VAI’s well-considered business model and the success which they have achieved in the first year has confirmed our assessment. The team provides highly digitized solutions to assist small and medium-sized companies to optimize their short-term liquidity,” explains Olaf Dierksmeier, Head of Sales at VR-Leasing AG. “We are pleased to be cooperating with VAI in our capacity as an experienced service provider and partner of the Berliner Volksbank, contributing our processing know-how to the promotion of digital on-demand financing solutions as a viable alternative to classic forms of financing, thus providing medium-sized companies with major opportunities for growth.”

Setting a good example

“German medium-sized companies have an international reputation and are the backbone of the country’s economy. That’s why we want to help SMEs. Our alternative digital purchase financing service is designed to provide assistance primarily to small and medium-sized companies from a wide range of industries, such as retail, manufacturing and classic artisan trades. The new partnership will give us further strong support to achieve our mission of meeting the financing needs of medium-sized companies unbureaucratically and using digital means, thus boosting their opportunities for growth,” emphasizes Garry Krugljakow, founder and managing director of VAI.

Within the scope of seed financing in 2017 the fin-tech company had already managed to raise a total of EUR 5.5 million. This investment capital was ploughed into speedy expansion of the platform. By December 2017 VAI had already received financing applications for a total of EUR 500 000. Today, just 16 months after the company’s founding, the current 25-person team has brought a strong refinancing partner on board and processed applications from over 2 000 registered customers for a total deal volume of some EUR 25 million.

“Win-win-win situation” thanks to digital transformation

Over 75 % of VAI’s customer enquiries are submitted using smartphones. The concept is not only extremely simple to use; the business model also generates a win-win situation for all three parties involved in the purchasing process. The customer benefits because he is able to purchase the goods he requires quickly and without additional fees. The supplier benefits because he receives payment immediately, eliminating the risk of default, and VAI benefits because it primarily finances itself through the early payment discounts granted by the suppliers and the fees charged during the financing period. The total costs are often lower than the interest charged for a classic overdraft facility. A service which meets a niche demand throughout Germany, particularly from regionally located, smaller and medium-sized companies, for example in the trade or manufacturing sectors. When doing so, VAI finances globally-sourced goods, working with suppliers around the world. Customers can thus obtain pre-financing for pre-payment orders from China just as easily as for deliveries from the UK, continental Europe or the USA.

Growth motor on course for growth

VAI’s platform uses artificial intelligence to enable it to provide small and medium-sized companies with purchase financing in just minutes. Customers are able to submit their first invoice immediately after the process has been completed. All processes are digital and take place in real time. By pre-financing the purchase of goods from suppliers and granting longer terms of payment VAI provides SMEs with greater flexibility when making purchases. The company thus bridges an economic gap which has previously inhibited the growth of medium-sized companies. In future decisions on applications should be made even faster. This will be achieved via further automation of the credit checks carried out in the platform’s background. In addition to increased speed, implementation of usability improvements requested by users is also planned. These improvements include, for example, an intelligent instalment payment calculator; real-time bank transfer payments of suppliers’ invoices; real-time account analysis and the connection of further software solutions to facilitate easier integration of VAI into their systems.

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