Lender QuickFee has a business model that has largely isolated it from increased credit risk so far during the pandemic recession.
Quickfee lends to customers of professional services firms. It provides a form of invoice finance, allowing accounting and law firms to set up monthly payment plans for their clients. Clients take out loans with terms of up to 12 months.
Transaction are conducted online, with firms’ websites linking to the QuickFee platform.
The firms grant QuickFee “the irrevocable right to require the firm to purchase a client loan for the outstanding amount in the event that a client defaults on an instalment payment”.
QuickFee says the underlying firms are low risk and it conducts annual reviews of all client loans and firms. It culled some smaller firms during the year.
According to its 2019/20 financial report, it has experienced “minimal impact of payment deferrals and arrears during the COVID-19 period due to professional firm guarantees, personal guarantees for smaller firms and credit protection insurance.”
It said the accounting industry remained resilient and there was increased demand for payment loans.
The company had gross loan receivables of $37.1 million at June 30 and expected credit losses of $573,000. It wrote off just $8248 of loan receivables during the year.
The company made a loss of $3.8 million in the year to June, compared with a loss of $1.2 million in 2028/19. It said the result was affected by the cost of customer acquisition, which increased substantially during the year, and higher R&D spending.
The company, which listed on the ASX in July last year, also had $810,000 of IPO expenses.
It used funds raised in the IPO to grow its business in the United States, where it has been operating since 2016 (its local operations have been going since 2009).
Net interest income rose 41.4 per cent to $4.1 million. The Australian operation contributed $3.3 million of income (up from $2.6 million in 2018/19) and the US business contributed $730,000 (up from $357,000).
The Australian business contributed a pre-tax profit of $851,000, while the US business lost $874,000.
The company said it has 26 of the top 100 US accounting firms signed up.
It loaned $13 million in the US - up 63 per cent on the previous year, and $49.3 million in Australia (up 17 per cent).