Made in Britain: Digital invoice finance platform, Hydr

Hector Macandrew details his innovative invoice platform, Hydr, and explains how it is changing the perception of invoice finance.

Tell us about your business?
My name is Hector Macandrew and I am co-founder of Hydr. Hydr is a proprietary, digital invoice finance platform. We pay 100% of your invoice, minus our fixed fee, within 24 hours. This helps businesses optimise their cash flow.

Where did the idea for your business come from?
Invoice finance isn’t particularly new; it has been around for a long time. It enables businesses to unlock the cash tied up in outstanding invoices, rather than waiting weeks or months for them to be paid. It is a positive, powerful tool to manage cash flow, particularly during those capital-intensive periods of a company’s economic cycle.

We were founded last August and started trading in May 2021. We are headquartered at Enterprise City, in the heart of the tech district of Manchester which is home to a number of brilliant technology companies.

Me and my co-founder Nicola (Weedall) have had first-hand experience of the transformative impact that managing cash flow can have. We knew that with the right technology, and with transparency and simplicity at the heart of our proposition, Hydr could help many small businesses by optimising their cash flow.

We feel strongly that the success of a business shouldn’t be about its ability to wait for payment – and with nearly two thirds of all SMEs experiencing either an increase in late payments or payments frozen completely* as a result of the pandemic, we believe our service is more relevant than ever.

How does it work?
At Hydr, we go further than market norms. We pay 100% of the value of your invoice (rather than 70% or 80%) reducing payment terms from up to 90 days to 24 hours. Instead of a complex menu of subscription fees, listing fees and the cost of financing each invoice, we charge a single fixed, transparent fee for each invoice we fund.

The fixed fee we quote is always the fee you pay. It’s inclusive of credit insurance and doesn’t change, even if your customer is a little behind in paying their invoice. Onboarding is fully digital, giving funding decisions in real time. Furthermore, our platform integrates seamlessly with Xero’s cloud accounting software making raising and reconciling invoices effortless.

We work with small businesses registered in England in Wales that sell products or services to other businesses. We build strong, professional relationships with their customers, freeing business owners to spend their valuable time on running their businesses, rather than worrying about long payment terms, or chasing late payments.

What is your background and what does your role in the company consist of?
My career is rather mixed! I left school at 16 to study the piano and conducting, ending up as Artists’ Manager of Scottish Opera. I then moved to London to become a headhunter working with private equity and venture capital funds for over 17 years, including founding my own firm, Hatton Grange, before it was acquired by Calibre One in 2015 where I became a Managing Partner. Along the way I became a pretty active angel investor.

As a small business founder, manager and technology investor, I’ve first-hand experience of scaling companies while keeping a very close eye on cash flow. Together with Nicola, who has a career in lending and invoice finance, we knew that with the right product, a cloud-based digital experience and transparency at the heart of our proposition, invoice finance was ripe for disruption. We firmly believe that we can help many small businesses by interacting with them in a way that is current and relevant.

What sets you apart from your competition?
We’re one of the only invoice finance companies to fund 100% of the value of your invoice for a competitively priced, fixed fee. We charge no subscription or listing fees and our price doesn’t change even if your customer is a little behind in paying the invoice. The fixed fee we quote is always the fee you pay and also includes credit insurance.

Our proprietary digital platform is unique and best-in-class – demonstrated by our listing and endorsement on the Xero Marketplace. Our product is married with a human, relationship-based service leveraging our team’s expertise.

When you sign up with Hydr, we become an extension of your finance team. Our promise is to invest time and energy in building positive and professional relationships with your customers, freeing you up to focus on managing and building your business with certainty around your cash flow.

How has business been during the Covid-19 pandemic?
Since we were founded in the middle of the pandemic and spent the first 8 months developing the product, we have not been adversely affected. In fact, it was actually a good time to take a step back, scope and then build a great product.

Coming out of the pandemic we see that many small businesses who have great customers will be challenged as they ramp up activity while Government support tapers off. This is where we can add real value by enabling them to have their invoices paid within 24 hours, rather than weeks or months later.

Optimising your cash flow is critical for any business, be it just starting out, going through growth or managing tough challenges like the pandemic. We sincerely hope that as companies come out of what has been a remarkably tough time, the service we offer will be a significant support to many.

How do you see your market evolving over the next few years?
We believe our market is set to grow but we need to work hard to change some people’s perception of invoice finance. Many think of it as something that is rather opaque, hard to apply for, hard to cost and akin to admitting defeat to their customers and competitors. We have built a proposition that is transparent, very easy to apply for and we are working hard to change these perceptions – invoice finance is a really useful tool for ambitious companies that want to fuel growth or great business that want to optimise their cash flow.

When you look closely at the cost of our proposition versus asset finance, taking out a mortgage, an overdraft or another credit card, we are convinced that we will be a cheaper option. Not only that, but we are saving valuable time by taking on the responsibility for collections.

What’s the hardest thing about running your business?
Winning customers. It’s that simple. Once we have on boarded a customer, they love the product and become pretty loyal – Nicola and I are spending a lot of energy right now spreading the word that invoice finance is a positive thing.

Have you received any financial support for your business?
Yes – we are extremely proud to be supported by a small group of seasoned angel investors who have great expertise in finance, technology and scaling successful businesses.

What have been the biggest challenges you’ve faced?
One of our challenges – but one we enjoy tackling head on – is changing perceptions of invoice finance. Coming out of the pandemic, we observe that many business owners are extremely cautious about taking on new or different kinds of financing options. Our market research has shown that some business founders are concerned that their customers might view them differently if they decide to finance their invoices through a third party.

We want to shout from the rooftops that this is not the case! Invoice finance is not admitting defeat or a sign of weakness. We passionately believe that it’s a sign of ambition, confidence and strength. You want to spend your time on building your business and you need your hard earned cash in the bank as quickly as possible to fuel that growth. Invoice finance done well makes great business sense and can be transformational.

What’s the best decision you’ve made so far?
Looking for and finding a great business partner in Nicola. Founding and selling your own company as a sole founder is a great experience, but it was at times a pretty lonely one.

If you could go back and change one thing, what would it be?
Honestly, not a great deal. There are lots of little things that we would do differently as we iterate the product – but so far, touch wood, there is nothing I would change.

What has been your proudest achievement so far?
Having our product rated on the Xero Marketplace so soon after we launched. They quite rightly put us through our paces and it’s terrific that our proposition has now been thoroughly tested and vetted by a really impressive software company. We understand that building trust is a critical part of our journey, and this was a massive step in that direction.

What are your hopes for your business in the next five years?
Am I allowed to say world domination?! At the very least, we will have lots of customers whose business lives have been transformed by their cash flow being robust and predictable, and lots of leaders within those businesses whose time will have been saved because a trusted partner is managing their customers and making sure that invoices are paid on time.

We will continue to scale our business and will integrate with more cloud accounting software providers so that customers who are not with Xero can take advantage of our service. We have a significant team build to execute and a few other products in the pipeline – watch this space!