Challenges

The screening process for corporate finance in Japan focuses on collateral and guarantor credit, making it difficult for smaller SMEs to obtain loans from banks and other lenders. In addition, as is the case with traditional factoring, three-way agreements involving the companies to whom accounts receivable are sent could affect the creditworthiness of future business, which is why it has not become popular.
OLTA's service is available online and silent to the accounts receivable company, making it safe for SMEs to use. It is particularly noteworthy that SMEs are the main consumers of the service in terms of financial inclusion.
Unlike large corporations, which can freely obtain debt financing when necessary, SMEs, who have difficulty in securing purchase money for unexpected order opportunities, have a strong ally in factoring, which is readily available anytime online.

Primary target

Which group does your product/service primarily target?

Description of Innovation

Japanese FinTech startup OLTA is a pioneer in providing Japan's first online factoring service to SMEs. This service is favored by many SMEs and freelancers because it is short-term, small-lot, online-based factoring that can be used regardless of company size or balance sheet credit. OLTA is unique in that it not only provides a service, but also works on "social implementation" of factoring through partnerships with many local banks. Today, seventeen regional banks have entered the cloud-based factoring business through a partnership with OLTA, and are helping SMEs by providing working capital in Japan. In particular, the Japanese government's provision of a 40 trillion yen public debt financing COVID-19 support program in 2020 has led to a situation where SMEs debt ratios remain high, and the value of factoring, which is not a liability, is attracting renewed attention. In a Japanese financial system that is traditional loan-oriented, these move by regional banks to support SMEs by adding factoring to their service lineups will contribute to the spread of alternative or complemental financing market. Short-term online factoring for SMEs in Japan featuring partnerships with regional banks

Results

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