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Revolut Sees Digital Horizon For SME Business Admin

It’s difficult not to have a soft spot for Revolut, not least because Martin Gilbert, the brilliant founder of Aberdeen Asset Management (known as Abrdn, nowadays after a daft re-branding), is a driving force of the digital bank.

Revolut’s latest move is to provide small-business administrative services that the mainstream banks try and often fail to do.

After rolling out payroll features in FebruaryRevolut is today upgrading its business accounts with new spend management capabilities.

The feature will let Revolut Business customers issue an unlimited number of physical and virtual cards to their teams and then monitor and manage their usage.

Combined with Revolut’s existing expense tools, the feature puts the fintech slightly ahead of its business banking competitors like Starling Bank and Monzo—as neither offer card issuing beyond account holders.

Starting today, the feature is available in the UK, US and across Revolut’s EEA markets, where the fintech has over 500,000 active Revolut Business accounts.

“Businesses are cautious about giving their staff cards because it’s considered risky or a poor way to control funds. But having few cards shared by the team can increase fraud risk and slow down operations,” said James Gibson, head of product at Revolut Business.

“This was the premise we used to design a new feature giving companies real control of their funds and preventing overspending.”

Spend management will likely help Revolut target larger SMEs and corporates who demand more advanced features and puts the fintech in competition with dedicated expense management providers like Soldo.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.

 



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.