Behalf Payment Systems

Well, this is easy... front run accounts receivable and make it up on collections...  and charge a pretty penny for the "competitive advantage" of pre-approved B2B credit approval. Something tells me the principals have never worked a trade show nor been in wholesale business to business.    All concept, no reality.

Here is the offer:

Behalf pays vendors upfront so that their small business customers can buy more and pay back on more flexible terms. 

But on credit deflation the longer before you are paid the harder the dollars. Buy more what?  Why do we ever need to buy more than is necessary?  The buying plan is designed to buy just the right amount.  And when you buy right, you can meet vendor terms standard in the industry.  Once you decide to farm out mission critical skillset, you are asking to fail.

The offer is to solve a problem that does not exist.

From a cash flow perspective, this phenomenon is mind-boggling – you are literally trying to plan and source your big season or entire years inventory in a matter of days. Even if you can afford it, what will that mean for your balance sheet? By spreading out your payments over time, you can both increase how much you buy, and better plan how you pay back.

Any buyer at a trade show without a buying plan is an idiot, and perhaps that is their intended market, idiots they can shake down coming and going.  All of the problems mentioned in the article are management problems, not finance problems.  You cannot pound a nail with a screwdriver.

I can't see where this gig will replace vendor financing or factors, the only two eternal offers.  And both management issues, not finance issues. The idea that the internet changed anything much is a delusion that just keeps precipitating the malinvestment and misallocation of resources.

Second, the website offers this:

This approach enables us to approve 30-40% of the small business market. That’s over 4x the approval rate of the credit card industry.

That is a false parity - why compare credit card risk approval at any rate, since taking credit cards as payment is to give up too many points in the transaction. And anyway, which credit card risk group is Behalf 4x the approval rate? Standard practice of checking B2B credit is about 80% approval rate, so what is attractive about Behalf's 1/2  as good performance? And

Suppliers across the U.S. use Behalf to transform purchase financing into a competitive weapon in their industry. On average, suppliers that use Behalf see a 20% increase in sales. 

Yes, increase sales and go out of business.  Suppliers building infrastructure to serve people soon to fail for outsourcing mission critical work leaves them malinvested and resources misallocated. Third:

Let us pay your customers’ invoices and reduce your accounts receivables. If your customer misses a payment to us, there is never any penalty to you.

I know I would set the algorithms to: pick sitting ducks we can skin.  Let sloppy people overbuy, and then nail them and be the first to shake them down.  They are going out of business at some point anyway, might as well the ones to clean them out.

Make it on fees on the front end, and then squeezing the late payers on the back end...  but it is too easy, the more creative work of business is more interesting than any of that.

Then this:

Behalf (beta.behalf.com), a small business financing company, backed by Sequoia and Spark Capital.

Good to know these VC funders, in essence elaborate pump and dump operations, have not become aware of the changes with credit deflation.  That they are backing a credit facility designed for an inflationary world when credit is in secular deflation means they are clueless.  Good to know.

I bet this venture fails to gain traction.  I'll be wrong when it gets acquired by google or amazon or some such (and right if it gets acquired by alibaba or microsoft).

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