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Defacto offers instant, short-term, 100% flexible financing for SMBs.

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How Allocab increased funding capacity by 30% with Defacto’s flexible financing
Mathieu Galvani
December 21, 2023
There are 3 major advantages: ultra-flexibility, the scoring method, and speed of implementation.
Hugues Chabalier
Senior Manager

How Allocab increased funding capacity by 30% with Defacto’s flexible financing

About 2C Finance & Allocab

I’m a fractional Chief Financial Officer (CFO) with 2CFinance — a finance professional working part time in multiple companies. I manage the same responsibilities as an internal CFO and oversee the company's activities. Depending on the needs, this involves cash flow tracking and projection, financial analysis to aid decision making, taxes, and implementing financial dashboards.

Founded in may 2011, Allocab is an instant online booking service private drivers or moto-taxis. The user can choose a driver with criteria such as the brand and the model of the vehicle, the quality note of the driver, wifi access, and more.

‍At Allocab, my role is to support the management team through their current phase of rapid growth and the financial structuring it demands. In particular, this means addressing the challenges around financial predictability and securing working capital requirement (WCR).

The challenge: a tricky cash cycle

‍Allocab has a significant, recurring need for WCR, which comes from the nature of our sector. We need to pay drivers much sooner than we can collect payments from our B2B clients, who we bill on standard payment terms. 

We sought a solution that could meet this financing need, but more importantly, one that is flexible and sustainable long-term, because these working capital needs are fundamental to the business.

Other financing solutions in use

‍We also use factoring. But it has limitations:

  • It doesn’t address our issue of paying on our service providers (drivers) well before invoicing our clients.
  • It often only works for our larger ones, not all of them. And the service isn't always suitable, especially for clients with complex approval processes. This creates long validation delays with the factor.
  • Additionally, factoring doesn't finance 100% of the assigned flows.

The solution: Credit lines through Defacto

‍Defacto perfectly meets our needs. We get a maximum line of credit to use for payment campaigns, which is then regenerated by customer collections. And this credit line automatically evolves with our usage and growth, already increasing by 30% since our launch. 

This flexibility is a significant advantage over traditional bank lines, where ratios unrelated to our cash flow increase can be restrictive.

Key advantages of Defacto's short-term financing

I see three major benefits:

  1. An ultra-flexible product: The credit line evolves to match business growth. There are no commitments or minimum financing requirements. This gives us freedom in usage.

    Day-to-day pricing allows us to control our costs, repaying freely. This really encourages responsible financing management.

  2. Speed of execution and implementation: The launch was smooth and fast. And since then, the Defacto team has been extremely responsive and attentive to our queries and feedback.

  3. The scoring method using existing internal tools: It's innovative and fast, enabling alternative financing for many SMEs for whom traditional ratios might be unaligned with the company's true situation.
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