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Satago sold

I rarely talk specifically about particular lenders because relationships are always on going and frankly I am understandably selfish about current market information that I have acquired. However the news that Satago have been sold to Oxygen finance is interesting although not unexpected. It could signal more signs of consolidation in the peer to peer fintech market.

Satago’s orginal model was supplying a email credit control service. Subsequently this was to be augmented by a invoice finance package and it was all very slickly put together. However the problem as I saw was that no business is going to adequately manage its credit control with email chasing alone. In fact this claim

The addition of Satago, whose cloud-based software gives small companies the same level of credit control as a larger rival

…is complete nonsense.

Emails are by some distance the least effective method of credit control. As any credit manager will tell you, it is a frequent myth that credit control is purely a process that can be automated. To be fair to the smart people running Satago, they seemed to come to realise this

Secondly the invoice financing was seen as a service to augment the credit control. This is of course an complete reversal of the method by which factoring has been sold over the years. Its a reasonable approach but gave the impression of being an afterthought rather than the end product.

I liked the guy running Satago and he was clearly very bright but many have entered the credit control market without direct experience and found that an assumed simple solution simply does not work.

In many ways the claims made going forward and the methodology employed so far do enscapsulate some of the issues that fintechs need to address.

Credit is far more of a people driven issue than often assumed. Collections is driven by relationships. Credit is about who you are lending to as much and maybe even more than the numbers. Isolating one factor and hanging your hat purely on what is believed to be the magic bullet solution simply will not work

Need an analogy?

Imagine a premiership club buying a player. Do they spend the £30m on the basis of the last set of “assist stats” and goals scored?

Or do they get to know precisely who they are dealing with?

 

 

 

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