Azzurro Associates, a buyer of commercial non-performing loans backed by a US investment fund, has announced its intention to provide cash against at least £1bn of UK businesses’ unpaid invoices.
Azzurro said that as the Government’s Coronavirus Business Interruption Loans Scheme (CBILS) takes time to get off the ground, businesses with £50,000 or more of unpaid commercial debts could quickly improve their cashflow by obtaining cash through its debt buying service.
Manchester-based Azzurro said it is alone in the UK in offering clients cash against their B2B overdue debts. Businesses have previously been forced to choose between writing off bad debts or taking costly and time-consuming legal action themselves, the finance provider said.
Azzurro, founded in 2017, said it is focused on the underserved commercial B2B sector and is looking to fund UK businesses with total unpaid invoices between £50,000 to £10m.
In addition to providing SMEs with upfront cash, Azzurro will share collections it achieves on the unpaid invoices, further improving businesses return on the unpaid invoices, the company said.
The coronavirus lockdown of the economy has seen the problem of unpaid invoices begin to spiral out of control, with many larger businesses choosing not to pay smaller suppliers in order to preserve their own cash – thereby creating a shock to cashflow that is now rippling across the economy, the company noted.
Philip King, the Interim Small Business Commissioner, welcomed this development from Azzurro to “introduce different and innovative solutions.”
While invoice finance providers will fund in-date invoices, Azzurro provides cash for overdue and written-off invoices that businesses are struggling to collect. This can provide immediate liquidity for businesses struggling with mounting bad debts, the company said.
Lindsay Town, chief executive of IAA-Advisory doubted Azzurro’s commercial debt purchasing efforts would have much of an impact on the traditional players in the invoice finance sector, “as purchasing and collecting delinquent debt is quite specialised and requires a different skillset from the traditional players.”
He added: “Funds such as Azzurro generally would not like the returns available from the ‘traditional’ market and their operating model is generally very different so I think that neither should be concerned.”
Andrew Birkwood, chief executive of Azzurro Associates, said: “As coronavirus leads to more businesses failing to pay their suppliers, businesses further up the supply chain need to make sure they don’t run into liquidity problems.”
“Faced with months of costly legal action to achieve payment of an invoice, most businesses simply accept bad debts and write them off. There is now a better option.”
“We’re looking to provide a vital source of liquidity for British businesses. Generating immediate cash from bad debts could be the solution for many companies facing a coronavirus cashflow crunch.”
The company is regulated by the Financial Conduct Authority.
Azzurro Associates Ltd is a subsidiary of Azzurro Associates Holdings LLP, whose ultimate controlling party is Elliott International LP, a US Cayman Islands incorporated company, registered with the US Security and Exchange Commission.