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Lloyds Bank is ramping up its invoice finance operations in the United Kingdom, taking a 20% stake in cash management platform Satago.

Based in London, Satago provides a cloud-based software solution that connects to companies’ accounting software and offers automated credit control, risk management and invoice finance.

The two have been working together since December, when Lloyds agreed to run a six-month trial of the fintech’s product, developing Invoice Finance Manager, a solution that the bank says fills a gap it identified for funding single invoices. The bank’s website describes IFM as “a solution for businesses with one or two clients on longer payment terms, which is having an impact on their cashflow. IFM allows them to pick and choose which invoices are included in the facility via an easy-to-use portal.”

Following the success of this pilot, and a competitive tender process, Lloyds has now agreed to license Satago’s software platform for its single invoice finance and whole-of-book invoice factoring customers. It is also making a £5mn equity investment into the company, which the bank says demonstrates its ongoing commitment to the invoice finance product.

“Our partnership with Satago goes beyond that of a supplier and buyer relationship. The equity stake we have taken in the business underscores our commitment to deliver best-in-class, future-focused solutions for our UK clients by partnering with a market leading provider with proven capability,” says Gwynne Master, the bank’s managing director of working capital.

According to a statement by Satago parent company Trufin, Satago expects to be paid a recurring fee for each customer of the bank which utilises Satago’s platform, as well as one-off implementation fees, with the final terms of this agreement subject to commercial negotiation.

Working capital solutions such as invoice finance have seen an enormous uptick in demand since the start of the pandemic, as late payments and delayed deliveries placed a squeeze on firms’ liquidity. Lloyds says its recent research has revealed that over 54% of firms that have seen a change in customer payment time since the start of the pandemic have experienced slower payments, with debtors most commonly citing overdue payments from their own customers and cashflow pressures as their reasons for paying late.

“The last two years have been hugely difficult for businesses everywhere to navigate,” says Sinead McHale, CEO of Satago. “Across the country, we’ve seen countless examples of SMEs that have had to innovate and pivot quickly to maintain their critical role in the economy, all while chasing late payments and challenging debts.”

Satago says that it now aims to reinvent invoice finance as a mainstream product, making it available to all UK businesses regardless of size or sector.