Cloud accounting software firm Reckon has recently expanded its product scope, offering up finance for Australian small to medium business in a bid to remove red tape and give SMEs cashflow within hours.
According to Reckon COO Dan Rabie, the move into the small business lending market was almost a natural progression.
"We've been selling accounting software to small businesses for many, many years and a lot of the time through accountants and bookkeepers that are partners. Consistently we got feedback from them that the biggest barrier to small business being able to succeed is access to capital," Rabie told ZDNet.
"We were aware of how the big four and other banks in general were dealing with that space and to be honest, they weren't adequately catering for it, they weren't interested in the small business loaning space."
In response, the publicly-listed organisation took a look at the fintech market in Australia and ended up in a partnership with Sydney-based startup Prospa.
"We did a lot of hard work with them and we've come to this fantastic partnership where we integrate our data into their platform and enable them to credit check our customers really quickly and simply," Rabie explained.
"We then pushed that out to our partners only a couple of months ago and the response has been unbelievable. There's no doubt there's a problem there and a solution like this seems to be solving that problem."
What emerged was Reckon Loans, which just this month reached seven figures, lending AU$1 million to small and medium-sized businesses since it kicked off only a few months ago.
Essentially, Reckon Loans provides SME's with unsecured loans between AU$5,000 and AU$250,000, and makes the funds available within one business day. Rabie explained the interest rate is dealt with case-by-case, depending on how risky a business is and how much money it is asking for.
As a cloud accounting firm, Reckon has the data Prospa needs to perform a streamline credit check.
"The whole aim is being able to assess the credit rating of a business in as small amount of time as possible so that you can give them access to finance within a couple of hours or at the most a few days. And that's the problem with the banks processes -- it's too cumbersome and takes forever," Rabie added.
Rabie believes accounting software is quickly moving beyond just that and instead is becoming a platform that services SMEs' business needs.
"The reality is small businesses don't buy a whole lot of software so it's very difficult to sell software to that space -- accounting software is the one piece of software that they have to have for compliance reasons," he said.
"Our feeling is that software is going to move from just accounting software into a greater platform that's going to provide additional services for those small businesses and loans is one example of that, but there are lots of other value adds we can add on to help them achieve more for their business."
Having been with Reckon for seven years, Rabie has seen the business undergo drastic changes in such a short amount of time.
"We are a completely different company to what we were seven years ago, or five, or even two years ago. We were first in distributed software so we didn't write our own software. We've had to evolve to write our own software," he said.
"We've had to do all that at the same time as managing shareholders expectations, investing where we've needed to invest.
"We're constantly balancing between the two and sometimes they're mutually beneficial, sometimes they're slightly different and in those times we make sure that we balance between the two."
Reckon's continued investment in new markets and its focus on growing subscription numbers helped it deliver a 6 percent growth in revenue to AU$57 million for the half year ending June 30, 2016.
At the time, the company told shareholders it had spent AU$11.8 million on development during the six months, with more than 50 percent of that put towards "new market" products.