Lex Greensill of Greensill Capital points to cloud computing for bills fix

11th December, 2018


By Damon Kitney, Victorian Business Editor – The Australian

London-based Australian billionaire Lex Greensill has urged the federal government to respond to the fallout from the Hayne royal commission by adopting cloud-based technologies to help its own small suppliers have their bills paid early as the banks put a squeeze on lending to small business.

Mr Greensill warned that the banks would respond to the findings of the royal commission by “being even more introverted and difficult for small and medium-sized businesses to work with”.

“The royal commission has shown the vice-like grip the incumbent banks have on the provision of credit in Australia,’’ he told The Australian.

Mr Greensill’s Greensill Capital group uses technology to usurp the traditional role played by the big banks as a lender to big and small businesses, by offering firms inexpensive online supply chain finance.

Supply chain finance companies like Greensill stand between an SME and their client, allowing the former to get their bills paid faster and giving them more cash on their balance sheet, while the client company gets more time to deal with its debtors.

Greensill charges a fee and an interest rate — which it claims is lower than bank rates — for providing the finance from its own German bank and international pension funds.

Last month the federal government revealed it would force big companies to pay their bills within 20 days if they wanted to win government contracts and would require them to produce an annual report detailing their payment terms with smaller suppliers.

Scott Morrison has made small business a key priority in the Prime Minister’s bid for the Coalition to be returned to power in the May election.

“The great thing about technology — particularly our machine learning tools — is that we are able to deliver cash to battlers in minutes and at the click of a button,” Mr Greensill said.

“Our technology has been embraced for a handful of forward-thinking Aussie firms, such as Telstra, Vodafone and CIMIC — benefiting tens of thousands of Aussie battlers — but the vast majority of big firms are yet to do so.

“We urge the Australian government to follow the lead of the British government, who have appointed us to offer the option of immediate early payment to all government suppliers at a cost of less than 1 per cent per annum (in British pounds).”

Mr Greensill, now a dual citizen of Australia and the UK, has developed close ties at the highest level of British politics and royalty.

Earlier this year he was awarded a CBE by Prince Charles for services to the British economy.

He has advised both Downing Street and the White House on the successful launch of their supply chain finance initiatives in recent years and counts former prime minister David Cameron as a good friend.

Last year Greensill backed the $700 million purchase of steelmaker Arrium by the London-based Liberty House Group. It also finances the handsets for mobile phone giant Vodafone in Australia.

In July, Greensill received a strategic $US250m investment from global private equity group General Atlantic, which valued the finance firm at $1.64 billion and made Mr Greensill and his brother Peter — who runs the family’s Greensill Farming operation at Bundaberg in central Queensland — billionaires overnight.

The funding will help the firm expand into China and India. It recently established an office in Singapore.

Mr Greensill backed the recent comments by former Macquarie chairman Kevin McCann, who told the Governance Institute of Australia conference that the royal commission would force financial services boards to become dangerously inwardly focused at a time when they could least afford to be.

Mr McCann said it would drive up the costs of a wide range of financial products and said the availability of credit would be “choked”, making it harder for people to get a credit card or a mortgage.

“I agree with the former Macquarie chairman — banks will respond by being even more introverted and difficult for small and medium-sized businesses to work with,’’ Mr Greensill said.

“We see that our combination of technology and non-bank capital is surmounting the enviable advantages of the incumbents and making major inroads into the Australian market.

“Job and wealth creation for Aussie battlers is inextricably linked to the availability of timely, low-cost and easily accessible credit.”

The nation’s richest man, Anthony Pratt, said in October that the SME sector was the “most under-banked” sector in the nation and called for technology-enabled lenders such as Greensill to find solutions to fill the void left by the banks in the wake of the royal commission scandals.

Mr Greensill has previously said he wants to work with local superannuation funds to help lend more short-term money to small and medium-sized businesses. The group has now provided more than $3bn to a group of more than 25,000 SMEs in Australia.

“We believe Greensill’s technology is able to play an integral role in transforming the $2.6 trillion Australian superannuation sector. Greensill unlocks capital so companies of any size and scope can put it to work every day,” Mr Greensill said.

“If we were to apply these principles in partnership with the superannuation funds, government, regulators, industry groups and Australian businesses the potential for economic growth would be vast.”

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