Westpac banks on invoice financing splurge as end of PDF lending takes shape

Westpac has relaunched its invoice financing operation as part of a push by its business bank to win commercial customers.

Westpac business lending managing director Tamara Bryden

Westpac will jettison its legacy invoice lending operations, as the banking major pivots to a relaunched offering aimed at commercial borrowers, promising its new system will better combat fraud.

Westpac will now offer invoice financing through a deal with fintech Dancerace, integrating with accounting software Xero, piggybacking off company records and receipts to offer the cashflow solution.

Westpac business lending managing director Tamara Bryden said the bank was planning to further bolster its invoice lending operations with tie-ins with fellow accounting platforms MYOB and Quickbooks, noting this would mark a step away from the bank’s previous PDF-based lending offering.

Previously, customers would be required to send Westpac PDFs of invoices alongside spreadsheets of transactions, which the bank would then assess and lend against.

This system will now be decommissioned, as part of Westpac’s Project Unite.

In its place customers can seek to access invoice financing from Westpac through electronic accounting software, borrowing against future earnings.

Westpac is making the push into invoice financing as the bank ramps up its foray into business lending, amid red hot competition in the sector from other lenders as mortgage returns are sliced by the impact of brokers and other operators.

Ms Bryden said although solo operators could access the invoice financing solution, Westpac saw the most opportunity in commercial segments.

She said already $65bn in invoices are lent against each year, noting the addressable market was enormous.

“Working capital has become really critical for customers,” Ms Bryden said.

Westpac is making a push in its business bank to grow amid red hot competition. Picture: Lisa Maree Williams/Getty Images

The Westpac business banker said lending volumes had been strong in the first quarter, with Ms Brydgen noting she expected that to continue throughout the rest of the year.

“Business demand is trending upwards, those are very positive trends,” she said.

Ms Bryden said the new system had been built around the lessons from the Forum Finance fraud, which saw Westpac stung by a Sydney-based rental business which borrowed more than $400m on fake leases.

The Forum fraudsters also repeatedly sold bundles of fake invoice receivables to banks SMBC and Societe Generale.

“It’s one of the reasons we’re excited to move on to the new platform,” Ms Bryden said.

“The key thing is expediency and the advantage we get off the platform, we’re no longer aligned off the month end reconciliations.”

However, Westpac will continue to inspect customers who borrow under its invoice financing program, with Ms Bryden noting a key element was “making sure those invoices make sense for the size of the business”.

Originally published as Westpac banks on invoice financing splurge as end of PDF lending takes shape