A European Startup is quietly working to change an often-overlooked, trillion-dollar industry, and people are starting to notice.
By: Collection Hub
Tags: Startup, Motivation, Disruptive Technologies, Marketplaces, Credit

A European Startup is quietly working to change an often-overlooked, trillion-dollar industry, and people are starting to notice.

Up to 80% of International Trade Is based on some form of credit or guarantee, according to the World Trade Organization. By some estimates, trade receivables are worth more than $3.7 Trillion in the manufacturing industry alone, and as much as 52% will be paid late to European and North American businesses.

In the United Kingdom alone, small and medium businesses were waiting on almost $80 billion in late payments and fees in 2017. Still, the commercial debt collection industry has seen very little of the fintech revolution of the past decade.

While billions and billions of dollars were being invested in financial startups focused on payments, compliance, wealth management, and Robo-advisory, less than $30 million in VC money were invested in debt-collection startups, according to data retrieved from CrunchBase.

As a result, technological innovation lagged in the industry, driving small companies out of business and consolidating the market in the hands of a few incumbents. Large debt collection agencies, like Atradius and Euler Hermes, have focused their innovation efforts on insurance, which is too expensive or unnecessary for SMEs

Collection Hub, a private company spun off from Iceland-based Eldar Ventures and led by Jakub Mahdal, brings together small, local debt collection agencies into a single marketplace, allowing SMEs to use best performing agencies from 138 countries.

Part of the team at Collection Hub

For SMEs, this means saving up to 50% on cross-border collection fees. Additionally, the average collection lag (from assignment to payment) is reduced to just 30 days. By contrast, EOS, another international collection agency, reported a 100-days lag. Some major corporations have already picked up Collection Hub, such as Deezer, Natuzzi, and Snap-On.

“However, our focus remains small and medium enterprises, our mission is to support thousands of companies struggling with cash flow. Our research shows that SMEs are much less likely to get paid on time, especially from bigger customers — that’s really not fair”. Simone Bertolone, Ops. Manager

For collection companies, this means being finally able to compete against oligopolistic competitors through free of charge access to thousands of customer. It also reduces the need for marketing investments. Some of the largest debt collection companies in the world have also applied to join Collection Hub’s marketplace but were turned down.

“We stay true to our mission, which is to work with medium-sized, local debt collection agencies. In our experience, they’re not only faster and more effective than their larger counterparts, but they also provide an incredible level of customer service, and are often cheaper”. — Jon Powell, Head of Partnerships

The company has already built the largest network of debt collection agencies in the world, covering over 132 countries. Each country is covered by at least 3 collection agencies, to give users enough options.

For all inquiries: simone@collectionhub.com