"Offering credit in-house is just not scalable. We need a partner who allows us to scale, who does that as their bread and butter business."
Customers want credit terms, but the marketplace needs money up front to ensure that suppliers get paid timely
Kriya Payments offering credit to their customers so that they can pay in 30 days or at the end of month following
How did Skrap harness the power of B2B buy now, pay later?
Kriya CEO Anil Stocker sat down with Hussain Hilli, CEO and Co-Founder of Skrap, to discuss the powerful impact of our embedded credit product.
2022 has so far been an exciting year of learning and growing for us at Kriya. We launched our embedded credit product and have integrated with B2B marketplaces and enterprises across a mix of sectors. One of our first partners was leading construction hire marketplace, Skrap.
Our CEO and Co-founder, Anil Stocker, sat down with Hussain Hilli, CEO and co-founder of Skrap, to talk about the business and how Kriya is helping them scale. Watch the video above or read the transcript below!
Anil: I'm really happy to be here with Hussain Hilli, who's co-founder at Skrap which is a construction tech marketplace, helping construction companies source the equipment and the materials they need to get on with projects and grow. Thanks for being on the show!
Hussain: Thank you very much for having me
Anil: So, I know we're going to dive into embedded finance and how we're working together, but before we do that tell us a little bit about the founding story: how did you set up Skrap why did you set it up back in 2017?
Hussain: Sure, so in 2017, whilst working on a construction business my co-founder and I have, we had a couple of sites and we were going to one supplier, and that was working very well. But as soon as we expanded out and had multiple sites it starts to become a bit of a problem. Now you had to get a different credit account with different suppliers. Price was variable, service was, you know, at times very good, at times atrocious, and you know it was a very clearly fragmented market that was there to be organised and to create a simple solution for.
Anil: Interesting, interesting. But starting a marketplace, I mean especially in construction, it sounds like that's a difficult feat. What were the hurdles you faced in the beginning?
Hussain: Well look, construction companies and contractors, although a lot of them, you know, have done things in a very traditional way - very over the phone, very manual pen and paper-based industry - in the last you know five years or so, it started to really move towards digital. There is a lot of cost saving in the efficiency that they're starting to realize that. And you know it's a perfect, opportune time to introduce solutions within the technology space for the construction businesses to make it more simple for them. It comes with hurdles no doubt, but nevertheless the opportunity is there to make things more facilitated for them.
Anil: And do they trust each other? I mean I guess trust must be a big thing when you're setting up a marketplace. How do buyers and some suppliers get to know each other?
Husain: So yeah I mean trust is based on a lot of the time actually transaction history so you kind of take that first initial bet on a supplier, or the other way around, and then you know, once you have a bit of traction - which is why they always kind of refer to you know, the old school network - you know people who have been around for 40-50 years will always use their mates. But it's not necessarily always the truth. It's all about reliability - the service and the convenience element of what you're actually offering to the market.
Anil: Okay so I guess one of the key friction points that you identified with us was the fact that, you know, buyers, or construction companies who are who buying on your platform, they want to have credit terms - you know, longer to pay. They want to pay on 30 days or 60 days, but then you need the money up front because you want to obviously ensure that suppliers get paid timely. How does working with Kriya help with this problem?
Hussain: Yeah, marketplaces are quite tricky because I think when you think of like a B2C, it's very much you know… Let's just take Uber as an example. You get in the cab, you pay before you know the payment's already gone out. The driver’s already received their payment as well once they've finished the ride. I think any of the B2B marketplaces. Usually it's on credit terms as a supplier. There's a supply chain, there's usually 30-60 days and it's a bit of a different beast. For that it means that you have to build that trust initially by taking on a customer and giving them that credit financing in order for them to have the cash flow to pay throughout the month. And by the end of the month they can pay off their bills. I think this is hard for a marketplace because you're now relying on your own working capital, your own cash balance, so it's important to have some form of financing partnership which allows you to then scale. Because even if we has millions and millions in the bank, all it does is it means that we're spending it all on facilitating their transactions and on our own operating costs.
Anil: Exactly, exactly. This is a key point of having someone who helps finance that solution and allows you to scale with it. How does it look like from a product perspective, what we've done together? How does Kriya, how is it embedded? And what do customers see?
Hussain: Sure, so the I think the one thing that we you know in our processes, you very much come on. you pick your service and then you transact. The two differences that we've done is that we've added a company finder, which immediately allows Kriya to provide a credit amount to the to the contract instantaneously, and then by the end as they're checking out there's a pay later button which they then just press. And the transaction is as seamless as that!
Anil: And that allows them to pay 30 days or at the End of Month Following.
Hussain: Yeah, exactly, and it gives you the finance immediately, so we receive immediately from Kriya, which is absolutely great for us. It gives us the working capital to then move things around. We can pay suppliers immediately, we can pay after 30 days on our side and it gives us that timeframe to be able to manoeuvre things. But also it gives the leverage to the customer, which is the most important thing here, is that requirement is there, whether we like it or not, and they need that. And being able to do that ourselves internally, in-house is just not scalable. We need a partner who allows us to scale, who does that as their bread and butter business.
Anil: You talk to your customers all the time. Are they excited about this innovation that you've embedded?
Hussain: Yeah very, very much so. Especially the ones who are already using Kriya for their invoice financing and for loans. It's a key thing for them to be able to have the freedom to grow as well so I think they're recognizing that with good transaction history they can grow that credit facility as well. And that's very important for businesses because, you know, a small business doesn't want to always stay a small business, and they do want to grow. So as they do expand across multiple sites, going back to our initial problem of “do I want to open a new credit account with every single new small business”? No I want a one-stop-shop where I can do everything in one place.
Anil: Okay, and I guess ultimately I guess this will make your customers more loyal and happier.
Hussain: I mean it creates a stickier effect and I like to think that's what's happening at the moment. I think it's giving that breadth to allow us to have that across the board, whether you're a small or a larger contractor.
Anil: And how easy was it to integrate with Kriya?
Hussain: I think it was done within a couple of days. I mean it's, although it was some stickiness on the product-side in terms of getting some stuff right, but from the API perspective it was a very easy integration.
Anil: Great and what's next for Skrap? What are the big plans that you have?
Hussain: So look, we're looking to continue to expand our market drive here in the UK. We're looking to expand into some other verticals within the equipment and material space but also looking to expand globally to other cosmopolitan cities you know in the US, France, Germany and hopefully Kriya can continue with us on that journey.
Anil: Absolutely, we will. You know here at Kriya we're really happy to be working with B2B marketplaces like Skrap. We're excited to embed our payment and credit options, allowing you guys to grow and get the cash flow into your marketplace, but at the same time, letting buyers pay on 30, 60 days. So hopefully we'll be there to help you scale and internationalize as well. Thank you for your time.
Hussain: And I look forward to our partnership to continue to grow from strength to strength.
Outro from Anil: So I want to say a big thanks to Hussain for giving up his time and coming here and sharing with us the stories of his marketplace and how Kriya is helping in the growth of his platform and delighting his customers. Business-to-business marketplaces and wholesalers now are looking to digitise. They're looking to embed credit at their checkout so if you're interested in any of these topics or themes that we've discussed today please get in touch go to our website pick up the phone and talk to our team. We'd love to hear from you and I'm sure that we might be able to help or give you some advice on the journey. Thank you for watching.
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