Euler Hermes, the French credit insurance company owned by the Allianz Group, and fintech Moment have formed a partnership to combat the late payment problems affecting small and medium-sized enterprises (SMEs). According to the Observatoire des délais de paiement, nearly a quarter of all SME bankruptcies are linked to late payment.
Late payments: very small businesses at risk
The 2018 report by the Observatoire des délais de paiement shows that in France, a company closes down every 33 minutes due to cash flow problems. According to the 9th edition of ARC's barometer conducted by IFOP, the average payment delay decreased slightly between 2018 and 2019, but remains substantial. It stands at 12.3 days between SMEs (versus 12.6 days in 2018) and 5.7 days between an SME and a large company (versus 7.4 days the previous year). This trend can be explained in part by the publication of the first fines with a ceiling of 2 million euros. Indeed, an amendment introduced in the Pacte law now authorizes the administration to publish the names of large companies sanctioned for non-payment.
Euler Hermes and Moment have launched an innovative insurance service as part of their partnership to reduce late payments, which account for 25% of bankruptcies among very small businesses every year.
An innovative insurance policy for small and medium-sized businesses
Born in June 2018 within Euler Hermes' Digital Agency, fintech Moment has developed an online platform enabling VSEs and SMEs to insure themselves on invoice. The service includes a financial analysis of the company's customers aimed at preventing the risk of non-payment and thus optimizing the management of immediately available funds. Once registered, the company simply uploads its invoice. If the invoice is eligible for insurance, the company will be paid 90% of the amount due as soon as late payment is detected, without waiting for a waiting period to expire. The fintech then takes charge of collecting the debt from the company's customers. Once the invoice has been paid in full, Moment pays the remaining 10%. Moment earns a commission of 2% on each invoice.
This partnership between the two players, coupled with an investment of 1.5 million euros, enables Euler Hermes to take the next step in its "Confidence to be Bold" strategic plan. Thanks to this solution, Moment will be able to grow while benefiting from the guarantee of the world leader in credit insurance, a guarantee of confidence for prospective customers. In the late payment market, Moment will have to contend in particular with Hokodo, a start-up aiming to insure 100 million euros of invoices by June 2020.