Nimbla promises credit insurance to save SMEs from zombies – News Couple

Nimbla promises credit insurance to save SMEs from zombies

While Britain has so far avoided a large-scale business collapse in the wake of the Covid-19 crisis, there are worrying signs that business failures are on the rise. The latest government data shows that there were 1,446 bankruptcies in September, up 56% from the same month last year. The trick could turn a torrent, warns Flemming Bengtsen, CEO of Insurtech startup Nimbla, which today announces the successful completion of a £5.1 million seed funding round.

“Business failures are on the rise now, as emergency support from the government during the Covid-19 crisis is withdrawn – zombie businesses will not survive,” warns Bengsen. “The risk is that we get a domino effect, where failing companies get unpaid bills that then cause other business problems.”

Nimbla can play a crucial role in combating this crisis. Provides credit insurance, which enables companies to secure invoices they have issued to customers for work performed. If the customer fails to pay his bill, the insurance starts, so the business is not out of pocket.

The idea isn’t new, but Nimbla’s technology and innovation could mean that many companies have access to this insurance. “The credit insurance market hasn’t changed much in 50 years, so we’re dragging it into the 21st century,” Bingtsen says. “We want to make sure that even the smallest companies can access it, as well as the big companies that are currently buying coverage.”

Bingtsen notes that credit insurance companies traditionally deal in bulk, with companies required to insure all bills they issue. This makes premiums expensive and does not meet the needs of policyholders, as many just want to cover their most important clients or their biggest bills.

Nimbla’s solution is an automated digital platform that provides instant quotes to businesses looking for insurance, whether they are looking to cover a single bill or the entire customer ledger. Currently less than 4% of small businesses use credit insurance products, Bengtsen says, but improving access to coverage could increase that number dramatically.

The company is exploring two different ways to grow. The first is direct selling to companies that want to buy a cover. second, to include its insurance solutions in financial products sold by banks and other alternative financing providers; The company has developed application programming interfaces (APIs) so that these service providers can simply link their insurance to their digital offerings, with Barclays as an early business partner.

Not only does credit insurance protect businesses, but it can also play a critical role in unleashing growth, says Bingtsen. For example, more and more companies are relying on bill financing as they invest for the future, and borrowing against the value of unpaid bills in order to free up cash flow. However, bill finance lenders may be less willing to lend against certain bills with an increased risk of default.

Bengtsen believes that now is the time to intensify Nimbla’s activities. British companies added £1.9 trillion of debt to their balance sheets in 2020, bringing the total amount owed to more than £6.6 trillion; This figure has been bolstered by the various government loan schemes offered to businesses but in large part it is creditors’ debts. “While more than half of them bear toxic debts that are unlikely to be paid, there is a huge opportunity and a huge responsibility for Nimbla to give businesses peace of mind and insure their bills against bankruptcies.”

Today’s funding should give Nimbla the firepower it needs to drive expansion, whether through its direct channel or through its embedded solutions. The round was led by Fin VC, a Silicon Valley venture capital fund, but Barclays Bank also participated.

Bengtsen says the money will be directed towards further product development, but will also support the company’s expansion, both in the UK and as it plans to move into markets including Europe and the US.

In fact, the business is already growing rapidly. Nimbla has sold 10,000 policies over the past 18 months and has around 2,700 active monthly users on its platform. It is one of a growing number of UK insurance technology companies that have been developed through the Financial Conduct Authority’s “sandbox” system, through which innovative financial services firms are given more freedom to build their products and services before facing the full strength of financial services regulation.

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