CBA swoops on Xero’s unloved Waddle

afr.com:

Commonwealth Bank has swooped on discounted invoice financing player Waddle, picking up the business just six months after former owner Xero wrote down its carrying value to nearly zero.

Waddle, which in effect buys unpaid invoices off small businesses that need immediate cashflow, has had a partnership with CBA since 2021, when banks began tiptoeing back into the invoice financing space after exiting in the 2010s.

Mr Cairns, who is in charge of business lending at CBA, said Waddle had “great systems built in and early triggers to identify misuse of funds”. Louise Kennerley

CBA executive Grant Cairns said that there was strong demand for Waddle’s offerings. “[Invoice financing] is important – all businesses have different borrowing requirements, certainly for SMEs and when growing a business.”

The takeover is a boost to CBA’s ambition to challenge market leader NAB in business lending, but comes as the banks are reminded of the risks inherent in such products after Westpac sued a fruit stand that it alleged had stolen $15 million over more than five years by faking invoices from suppliers.

Mr Cairns, who is in charge of business lending at CBA, said Waddle had “great systems built in and early triggers to identify misuse of funds”.

“We have triggers that we can monitor the ageing of certain invoices and even the misdirection of funds, those sorts of triggers that can identify misuse of funds,” Mr Cairns said.

Waddle was acquired by accounting giant Xero for $31 million in late 2020, but earlier this year had its carrying value written down to almost zero as the parent company cut costs. Xero said it was looking to exit Waddle, and attributed a $48.5 million impairment to Waddle in its 2023 financial result.

Mr Cairns