Managing a small or medium-sized business (SMB) is challenging enough without factoring debt collection, which explains why the stressful process oftentimes get left at the bottom of the priority list.
“It’s something that SMEs are particularly bad at. Sometimes they’ll bury their heads in the sand,” Flemming Bengtsen, founder and CEO of the digital insurance company Nimbla, told PYMNTS in an interview.
However, doing so comes with consequences. Recent data from the Bank of England show that one-third of British small businesses are now highly in debt — more than the pre-pandemic number — with the bank predicting more of them will collapse this year than in 2020.
This has created a huge need for Nimbla to step in and help businesses insure their invoices against customer insolvencies. Founded in 2016, the London-headquartered company provides individual invoice insurance against non-payment with real-time quotes, using its convenient and fast solutions to disrupt a sector where insurance sales can take up days or even weeks.
Since its launch, the company has processed close to 70 million invoices worth more than £2 billion, and it has seen demand triple amid the uncertainty created by the COVID-19 pandemic.
Read more: FinTech Business Insurance Startup Nimbla Raises $6.9M
To help more businesses access its services, the UK invoice insurance provider recently launched a new application programming interface (API) for banks, FinTech lenders and B2B platforms.
Earlier this month, Nimbala raised £5.1 million ($6.96 million) in a funding round towards expanding their product base, with a key focus on “becoming more and more embedded in as many platforms as possible.”
See also: Nimbla Teams With Wiserfunding To Safeguard Invoices
Bengtsen said it boils down to “getting close” to the creation of those invoices, which then “gives us incredible data that allows us to underwrite things better, pass on those cost benefits to our customers, and build some really exciting new products.”
He added that their business operates on a high level of trust that customers have placed in them to offer reasonable prices, unlike large insurers that can change prices as they wish.
Digitization, Automation and Digital Fraud
Last January, Nimbla partnered with Barclays Bank to give their institution’s 1 million SMB customers the ability to take out insurance against individual invoices from as little as little as £6 — rather than insuring a whole book, which can cost anywhere around £5,000.
Nearly two years into the partnership, Bengtsen said that results the have been positive, and that Nimbla is working toward becoming an embedded part of Barclays’ technology.
Bengtsen said the deal was inked during a time when it was becoming increasingly difficult to tell “who was in a good place or who was in a bad place,” and extending credit to companies who had no idea whether they were going to be out of business in six months’ time was looking particularly risky.
However, staying open during those tough times paid off, and Bengtsen said the company has a good loss ratio to show for it.
“There’s been a lot of naysayers [saying we] invite adverse selection, and I’m pleased to say that we’ve proven wrong on that,” he added.
He further touched on the wave of digitization that has accentuated automation in the InsurTech space in the wake of pandemic, simplifying experiences and increasing convenience for consumers.
Bengtsen said embedded solutions are helping bring banks up to speed on digital processes like e-signatures, but he cautioned that digitization hasn’t been without its risks.
“We definitely saw a huge increase in the number of people who were trying to submit fraudulent claims,” he said. To mitigate this, Nimbla has toughened its know your customer (KYC) and anti-money laundering (AML) measures.
Flexible Invoicing
Bengtsen said Nimbla is focusing its strategy on introducing more flexibility and expanding from covering one-off single-invoice transactions to large transactions on a whole-book basis.
“We want to be driving that,” he said. “It could be one invoice, or it can be the whole book, [customers get to] choose — fully flexible but super-slick and fully digital.”
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