Greensill targets huge market in unpaid wages

Greensill says migrating supply chain finance to earned but unpaid wages in the global supply chain is the next big challenge.

When Lex Greensill sat down with his board five months ago, he declared that migrating supply chain finance to earned but unpaid wages in the global supply chain would be the next big challenge and opportunity for his company.

He calls it a $55 trillion market.

“Those looking at the space are still approaching it from what is predominantly a payday lending mindset,” he said.

“But we already integrate into the accounting systems of employers today.

“That integration allows us to capture payroll information as well, if the employer agrees.

“So through our app, employees can choose to be paid everyday. It tells you how much earned but unpaid income you have and it will be in your account in seconds without any fees or charges.”

Mr Greensill said he had spoken to two dozen or so CEOs of big international companies about the opportunity and “every single one of them said they would do this”.

“The cost (for the employer) per employee would struggle to be $1 a month.

“That is a rounding error. Our plan is to offer this product to all public sector employers in all of the markets we operate in, including Australia.”

Mr Greensill already works with big companies such as Telstra, Vodafone and CIMIC but believes there are huge opportunities for workers in the public sector to be paid faster, which would have knock-on effects to suppliers.

Since July last year companies working on Commonwealth contracts have been required to pay invoices under $1m in 20 days.

Mr Greensill also believes the early payment concept could be extended to other Commonwealth government payments.

“I think we will end up doing the same thing for pensions and benefits. We would be thrilled to do that,’’ he said.

Greensill’s move comes as the federal small business ombudsman, Kate Carnell, is undertaking an inquiry investigating claims big companies have been pressuring suppliers to use supply chain financiers to manipulate their working capital positions.

In its submission to the inquiry, Greensill said while it did not intervene in relations between companies and their suppliers, it believed all suppliers — and particularly small businesses — should be paid as early as possible.

“Greensill supports 30-day terms and has adopted these terms itself for dealings with its own suppliers,” it said.

It also supported moves by global ratings agencies’ to improve the transparency of supply chain finance, noting all trade credit was a liability and should be count towards the indebtedness of a firm.