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Thursday 26th January, 2023

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New Horizons
New Horizons

Case Study

New Horizons

The Interface Financial Group (IFG) is growing again, this time with expansion plans for Europe says David Banfield

IFG started operations 42 years ago in a small town in Connecticut, USA and after about a year of operations in the United States, relocated to Canada in the greater Toronto area. The business operated there for about 20 years before it grew into a franchise organisation.

The Interface Financial Group had, over the first two decades of its life, serviced a very specific marketplace with a very specific financial service. It grew up as an invoice discounter assisting businesses in accelerating their cash flow – a service that has been accepted and widely used in major financial centres for many, many years.

The IFG twist on the service was a unique approach to the market and a simplistic approach to working with clients. In its traditional form, invoice discounting usually takes the entire book of receivables that a company has, and they are pledged to the discounter in return for a revolving line of credit against those invoices. It is an ongoing arrangement whereby the client contracts with the discounter to discount all of their receivables for a period of a year or more.

The service that has developed in the major money markets of the world has also evolved into a ‘high end’ one, in that traditional invoice discounters will not look at business below a fairly high threshold.

Small advantages

Interface founder John Sheehy saw the opportunity to break into a market that was almost totally un-serviced with a similar offering. He brought invoice discounting to the small business world. He did away with the concept of having to have a certain level of business to qualify and, equally importantly, he did away with the need for a contract pledging 100% of a client’s business over a long time frame. He created a ‘use-it-as-you-need-it’ service, offering his clients an opportunity to accelerate their cash flow, and hence their growth, by turning a single invoice or a batch of invoices into instant cash, with basically no restrictions.

Now, more than 40 years later, Interface is still doing the same thing in the same SME marketplace, which continues to be the hardest hit when it comes to finding a credit facility from their bank. While Interface continues to provide an ‘in-demand’ service to its small and medium-sized clients that are in an expanding mode, some things have changed. IFG started with its roots firmly in a one-office environment. While the organisation was able to market its service on a national basis, it was evident that its local market invariably produced the greatest volume of business with the best quality.

No one likes to see marketing efforts not being adequately fulfilled, however, and to some extent that was starting to happen at IFG. The solution was to create a delivery method that would service more than just one location. Franchising was the chosen expansion option as it gave IFG the opportunity to grow in a rapid but controlled environment; so John Sheehy and his team went about the task of crafting an invoice discounting franchise – the first of its kind in any financial market area.

As the franchise became

established, it proved that having the ability to handle business on a local basis and face-to-face with the clients was a tremendous asset, not only from a control point of view for IFG, but also from a relationship point of view from the client. Small business owners like to meet the individual who is helping their business grow, and they like it even better when IFG actually meets them at their place of business.

Spreading the word

Since franchising in a local Canadian territory, Interface has seen exponential growth in many directions. A natural evolution was to move in the much larger United States market, where franchising helped to overcome many of the geographical challenges a more conventional company structure would encounter.

Interface next expanded beyond its North American borders with an operation in New Zealand where the population base is only approximately four million people, and the economy is vastly different. Once again, with the recruitment of a local master licensee, a network of Interface offices was quickly established to the point where franchisees in Canada, The United States and New Zealand were all enjoying a solid business opportunity with their franchise, and one that generated a very acceptable return on their working capital. All of this while assisting in the growth of their SME clients and consequently, the local economy. More expansion has followed over the years with operations in Australia, Singapore, Mexico, Ireland, The U.K., and South Africa being the most recent additions to the network. In all areas IFG services the same market and operates in a consistent format through a licence and franchise type format.

Next steps

Over the years Interface has grown from being the only provider of this service to the SME market, to being the market leader. Certainly others have seen the merits of the business, and a very limited amount of competition has evolved. What has not been replicated, however, is the unique distribution method pioneered by Interface through a well-established franchise or licensed system. That approach remains one of the key elements not only for the success of IFG, but also for the success that licensees and franchisees enjoy.

Interface has laid the ground work for further growth and has set its sights on expansion into the well established European marketplace.

With experience in countries with a Civil Law system, and ones based on Common Law, Interface is well placed to tackle the vagaries of a new challenge. The first countries on its ‘wish list’ for Europe are The Netherlands and Switzerland – although the company will review opportunities in other countries if suitable master licensees become available. For stable growth Interface always looks for a locally-based master licensee to be the focal point of IFG operations. The success or otherwise of any expansion plans, as far as Interface is concerned, is finding the right match between its own aims and aspirations and those of a master licensee.

In short, with over 40 years of history and experience and an international network already established, Interface is well positioned to grow again.

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