Russ:  Hi I’m Russ Capper and this is BusinessMakers USA Live brought to you by Insperity, inspiring business performance.  Coming to you from Kansas City once again and I’ve got three guests today, all with C2FO.  First, Sandy Kemper, the Founder and CEO; Sandy welcome to the show.

Sandy:  Thank you, good to be here.

Russ:  Next up Sanjay Gupta who is the Chief Operating Officer; Sanjay welcome to the show.

Sanjay:  Thank you.

Russ:  And last we have Kevin Daniels, the Chief Product Officer; Kevin welcome to the show.

Kevin:  Thank you very much.

Russ:  Okay, tell us about C2FO.

Sandy:  Very simple it’s a marketplace for working capital where companies are able to come together to find the right price for early payment.  Let’s say you are a large corporation with a very diverse supply chain; your suppliers might be borrowing from a bank or might not be able to borrow at all, you’d like to strengthen your supply chain but you need to make a decent return on your cash.  Your supplier wants to lower their cost of borrowing or access cash more cost effectively, they use this electronic marketplace the way you and I would use the NASDAQ or the NYSE to order cash from their customers at a price that works for both parties.

Russ:  Wow, so the supplier gets paid early and they love that; I know that, I’ve been a supplier too.

Sandy:  Who doesn’t?

Russ:  And really the other side is the buyer is happy too.

Sandy:  The buyer is happy because he’s going to pay a little bit less because he’s paying early but that price is going to be better because it’s the supplier who is making the offer in the market.  Everything else is buyer-pushed pricing, in our market a quarter of a million suppliers are offering the price to induce their buyer to pay them early, so the price that supplier is offering is by definition a good price because they’re offering it.  So it’s I’d love to pay X to get that money and the buyer says well that’s better than I’m getting on my cash sitting over there in negative interest rate banks in Europe or low interest rate banks in the United States and I want you, my supplier, to be stronger so I’ll pay you early, that price works for me, thank you.

Russ:  And why did you use this term a quarter of a million?  Is that how many do business with you?

Sandy:  We have 250,000 suppliers in the marketplace today.

Russ:  My goodness.  So this sort of gets into that category of receivable financing that the banks do or specialty companies do, is that right?

Sandy:  It is but in ways we’ve stopped being – it’s not so much about risk-based lending because when that buyer pays the supplier early there is no credit risk.  So it’s an elimination of credit risk that benefits both parties.  And there are lots of suppliers – and I know Kevin will talk about this later – there are lots of suppliers that have not been able to access credit cost effectively in the United States; they might have it but it might be too pricey or they might not have it at all.  Lending levels haven’t even recovered to the pre-crisis levels of 2007 and 2008 and yet 55% of our economy is small and midsized businesses, so let’s build a marketplace that allows cash to get to those businesses so the economy can be stronger.

Russ:  So those businesses, those suppliers, tell us more Sanjay about the supply side of this.

Sanjay:  The suppliers in our marketplace are of all sizes, small, medium, large.  So think of a supplier who is small to medium if you will that needs cash – working capital – to either grow their business, to expand their footprint, to do more advertising, to meet their financial commitments during tax time or other times.  So these people have now produced and delivered the product to their customers, now they have to wait 30 to 60 days to get cash back but in the meantime they need to keep the machinery running.

Russ:  Absolutely.

Sanjay:  Where should they go for cash?  So they go to the banks and other places and it’s extremely hard for them to access that.  Through our marketplace they can access cash readily from their own relationship that they already have at a rate that works for them.  So that’s the uniqueness of this model that they are now getting money sooner and not having to worry about banks, etcetera and it works because the rate is so low it meet their needs.

Russ:  So do you have to qualify to be part of your market?

Sandy:  The qualification is that you have to have a trade relationship, the buyer has to be in the market and the supplier has to be in the market and if that works then we can create a match.  And we should do – we’ve been doing about $1 billion a week of fundings and with fingers crossed we’re aiming for our first $1 billion day in the next 30 to 40 days.

Russ:  My goodness and how old is the company?

Sandy:  7 years.

Russ:  And you had some funding to start right?

Sandy:  We were lucky, we had some good funding to start.  We were fortunate to have really great partners.

Russ:  Now still sometimes it doesn’t work because sometimes the buyer really can’t afford this, is that right?

Kevin:  Absolutely.  As we talked with suppliers and as we met with them and met their needs we learned more and more that we could do more for these suppliers.  So about 18 months ago we started a proprietary lending fund that was mainly going after two use cases; one is if the buyer doesn’t have enough cash to give the suppliers we could step in on their behalf and fund those suppliers.  The second is for any business we may have 20% of the buyers in the network, we may have 10% or we may have 30% of the buyers in the network, so we could step in and fund the buyers that are outside of the network giving them access to capital for basically all of their accounts receivable.  Not only that, it’s beyond just accounts receivable, looking longer term into purchase orders; looking downstream into other lending products as well.

Russ:  How do the banks feel about you?

Sandy:  We have some partnerships with banks actually.  In many ways what we do is more efficient than what a bank can do so banks might offer this to their large customers to strengthen the supply chain of the large customer.  And the banks have been – look, I was an old banker.  I ran a bank here in Kansas City before I became an entrepreneur and left the belly of the beast to go do fun things.  Banks aren’t that excited anymore about working capital lending because it’s complex, it’s highly regulated, there’s lots of equity they’ve got to put behind their loans; this isn’t an area that seems that interesting to them anymore.

Russ:  Okay wow, so they don’t look at you as a major competitor?

Sandy:  No they look at us as a partner.

Russ:  Okay, very impressive.  Well the whole model sounds almost too good to be true and you have some pretty good buyers that are part of your organization already right?

Sandy:  Yeah, we’re now above 50% of all U.S. retail sales coming into the market, 26% of all high tech, 22% of all transportation logistics so I think we’ve built something that might stand the test of time.

Russ:  Man if you say that for retail and tech you’re talking about some big companies there too right?

Sandy:  We have over $2 trillion of accounts payable in the system today.

Russ:  My God, totally impressive.  Well I really appreciate it.  Before I let you go I want you to share with us Kansas City, you’re here in Kansas City; what do you think of Kansas City?

Sandy:  Well I’ve been here for – well I haven’t but my family has been here for 4 generations.  You can talk to these folks, I got them to come to Kansas City; he was commuting away from Kansas City, Kevin was in Austin.  I think it’s a great place to be in business for business, it’s a great place to be with your family.  It’s a low cost and very supportive community for entrepreneurs.

Russ:  Cool, really cool.  Sandy I really appreciate it.

Sandy:  Hey thanks.

Russ:  Great story.  Sanjay, thank you.

Sanjay:  Thank you.

Russ:  Kevin, thank you too.

Kevin:  Thank you.

Russ:  And that wraps up my discussion with the C2FO guys Sandy Kemper, Sanjay Gupta and Kevin Daniels and this is BusinessMakers USA.