For several years, Open Banking has been preached as the future of next-generation financing. By creating an open system in which individuals and businesses alike can allow financial players to access some of their banking data, it enables the multiplication of applications for Buy Now Pay Later (BNPL) and credit granting.

We believe that after BNPL, the next buzzword will be RBF, or Revenue-Based Financing. In the same way that digital technology is reinventing payment in four installments by renaming it BNPL, RBF will rejuvenate factoring. Born in the U.S., RBF enables digital companies to accelerate their growth by quickly obtaining liquidity based on their current and future incomes instead of their history and assets.

Faced with the opportunities offered by this rapidly expanding market in the U.S. and around the world, in recent years several fintechs have launched their RBF platforms in France. The effervescence of the market launches the players in a race against the clock where it is crucial to avoid obsolete technological choices and to show permanent agility. In your turn, get into Revenue-Based Financing by using the Basikon platform.

RBF, the "next" BNPL for digital startups

Born in the U.S., Revenue-Based Financing (RBF) is not yet very present in France. By enabling a company to obtain cash almost immediately, it offers an alternative to traditional BtoB financing methods.

The concept is simple. When startups apply for this type of financing, they provide access to the financing company to various targeted data showing that they generate recurring revenues. An algorithm then assesses the risks and easily determines the amount and terms of their loans. If the companies are eligible, they receive the funds within 24 to 48 hours. Repayments are then calculated based on their monthly revenues and include a commission whose level varies according to the risk associated.

Who might be interested in RBF? Digital startups that need short-term financing but face a two problems: they have difficulty accessing bank loans because they have few assets and they don't want to raise money because they want to stay in control. But also growing business whose cash flow can be predicted very accurately, such as SaaS companies with a subscription-based business model. So we're talking about e-commerce and SaaS startups that need fundings to acquire customers and boost their growth through marketing campaigns.

With RBF, what was old… is new again !

Revenue-Based Financing sounds revolutionary, doesn't it? No need for history, tangible assets or collateral to access financing, a boon for startups! All you have to do is prove that you generate predictable future revenues.

And yet, RBF is based on pre-existing financial mechanisms, digitization has simply broadened their applications. It may make you think of a cash advance, but it is more like factoring – the only difference being that the future revenues being financed have not yet been invoiced. The forecasting logic is therefore taken even further, but risks remain contained thanks to the implementation of probes that allow for reliable scoring – which we will discuss shortly.

Large companies like Amazon, Square, or Striple have already been offering similar solutions to their merchant customers for several years. Take Amazon Lending for example. It's a program that offers short-term loans to the eligible sellers so they can finance additional inventory to expand their market share on the platform. The interest rates then vary based on their sales numbers. Sounds like RBF, doesn’t it? The only difference is that now the funds are available not only to the customers of certain platforms, but to any e-commerce or SaaS companies.

Want to launch an RBF platform? Here's what you need

First of all, you need financing. But we assume that you’ve already found it.

Secondly, your customers expect an interface that allows for a frictionless customer journey ("self-onboarding") and a quick decision and approval ("time-to-yes"). Therefore, you need an easy-to-use digital platform where they can easily deposit their supporting documents and give you access to data from their bank account and APIs (such as Google Analytics, Stripe, Facebook Ads, Sage) to measure their results and scalability. This step should be based on workflows that can be fully configured by your team to enable your marketing strategy to dynamically adapt to your markets and customers' profiles.

Now comes the time for scoring. You have probably already worked on an algorithm. Now you need this same platform to feed it with data through Open Banking connectors so that you assess the risk of each of your customers, validate or invalidate their eligibility, and determine the amount and terms of their loans in a minimum amount of time.

Once the contracts are generated and electronically signed, invoicing, payment and SEPA transfers via the platform need to be automatic. Now that your platform is finally operational, you need steering and reporting tools to monitor performance.

With Basikon's solution, don't make : buy

You can build your own RBF platform as we have detailed through the previous steps. But this will take you months, even years, when several platforms already exist. Don't you risk being left behind?

Alternatively, you can use the Basikon platform, which is capable of managing the entire lifecycle of all types of loans and leases, including the latest features like RBF. With access to all the tools and connectors you need, you'll be launching your RBF platform not in months... but in weeks.

With its low-code technology, Basikon enables your technical teams to remain agile and in control of the platform configuration. You will be able to make the workflows and connectors evolve with your business model as if you had built them yourself.

If you want to know more, request a demo here.