Japan’s accounting startup Money Forward forays into B2B deferred payments service

R to L: Yosuke Tsuji (CEO of Money Forward) and Naomichi Toyama (CEO of MF Kessai)

See the original story in Japanese.

Tokyo-based Money Forward, the Japanese startup offering cloud-based asset and accounting management services, announced on Tuesday that it has newly established a subsidiary called MF Kessai focusing on deferred payments service for B2B (business-to-business) transactions. Adopting the know-how of data-driven approach that they have been cultivated in Money Forward, MF Kessai aims to shorten the time to collect account receivables and to minimize the credit risk. In the press conference, CEO of Money Forward Yosuke Tsuji explained the purpose of both the new subsidiary and the new service is to clear up worries about money in business management and to increase B2B transactions.

Tsuji introduces the team members of MF Kessai

In respect to personnel matters of MF Kessai, Naomichi Toyama who joined Money Forward in 2014 and has been involved in promotion of MF Cloud to accounting firms or small-to-medium enterprises (SMEs) across Japan was appointed to CEO of the new firm. The office of MF Kessai will be established within the Finolab FinTech startup hub in Tokyo’s financial district of Otemachi, not in Tamachi where Money Forward is headquartered due to the difference of each business condition and the necessity to focus on the business field with a view to future growth, according to Tsuji.

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Toyama explained that five billing works arise when a seller sells any product or service to a buyer in an inter-enterprise trade: credit examination, billing information inputting, bill issuing / sending, depositing management, and payment urging. Among them, the new service MF Kessai automates the four works (90% of the entire billing works) except for billing information inputting by outsourcing on cloud and significantly reduces a burden of billing works which tend to concentrate on the beginning or the end of months.

As a recent business trend, implementation of cloud or direct sales can often be seen in every kind of business with the spread of internet. Since the implementation of cloud often causes a reduction of the sales per customer, sellers need to sell their products to more customers in order to secure the same sale as before. The direct sale forces pure retailers to engage in inexperienced works such as depositing management or credit examination even for customers who never be seen before. By performing billing works in these scenes for them, MF Kessai provides an environment where sellers can focus on their main work.

Among functions of MF Kessai, noteworthy points are the credit transfer as of completing billing data (early deposit) and the guarantee of account receivable collection. When a seller uses MF Kessai, it automatically performs a credit examination of a buyer. Although this process is not disclosed, transaction will be done in one minute at the shortest utilizing big data based on information obtained from external organizations and that Money Forward has accumulated. According to the results of the test operation, 98% of buyers has passed the examination so far.

After this, MF Kessai takes on the credit on behalf of the buyer and can pay to the seller as the seller completed the billing data in the shortest case. It is a similar service to the so-called factoring service, and the commission fee for MF Kessai will be set to about several present, according to Toyama. Since the charge system of MF Kessai has not been announced yet, it is not known at present whether this early deposit service will be provided for free as a default function or will be charged.

By shortening the time from billing to payment, it may generate various business merits; manufacturers will be released from necessity of the external dependence of funds required for stocking materials, or agricultural producers, whose business is basically promised on advance payment style, will get an opportunity to transact with unseen potential customers all over Japan. To provide this service, it is felt that MF Kessai needs a fixed fund. Tsuji commented on this matter giving an example of the firm’s financing service for enterprises MF Cloud Finance:

We are a tech company, so we will secure the fund through cooperating with external financial organizations, rather than depending on the balance sheet of MF Kessai.

Thus he implied the possibility of a fundraising from financial organizations. Since MF Kessai was established as a subsidiary independent of Money Forward, the possible cooperation scheme with financial organizations can be easily imagined whether it is equity-based, debt-based, or introduction of potential customers.

Kotaro Kurasaki (CEO of Rita Foods, running Kumamoto Basashi.com, an online marketplace for sashimi of horse meat) attended the press conference online and explained the merit of MF Kessai as a user.

The strength of MF Kessai must be the API (application programing interface); it greatly improves business efficiency with lots of information gathered by linking with users’ billing / account receivable management system or by linking with bank system. Although MF Kessai started its service that day, the API will be launched around this autumn so that its serious operation phase seems to start after that.

In the context of the credit / investment service for SMEs or proprietaries by data-driven approach, Japan’s CreditEngine had launched Lendy; in addition, a Japanese major account software developer Yayoi and ALT provided by d.a.t. plans to the service launch within this year as well.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy