IODM Ltd

Investor Insight

Operating in a rapidly expanding fintech industry, IODM is well-positioned to leverage the increasing demand for accounts receivable automation, particularly in medium to large ERP companies.

Overview

IODM (ASX:IOD) is a cloud-based working capital management software solution designed to automate and streamline the accounts receivable function for universities, commercial companies and other enterprises. This platform helps organizations efficiently communicate with their clients, debtors or students, facilitating the collection of payments while reducing manual processes. By integrating with an organization’s existing accounting systems, IODM aims to improve cash flow management and optimize working capital.

One of IODM’s key strengths is its ability to manage complex billing cycles, often associated with international payments. This feature makes it especially appealing to institutions with significant cross-border transactions, such as universities with international students. As of 2024, ten UK universities have implemented IODM’s platform, and the company is working to expand its presence in other regions, including North America, Asia and Europe.

IODM’s strategic partnerships, such as with Convera, have allowed it to penetrate the university market in the UK and European Union (EU). The initial success in these markets has set the stage for broader international expansion, highlighting the platform's scalability and potential to become a global leader in accounts receivable solutions.

From an investment perspective, IODM presents an attractive opportunity due to its strong growth potential and international scalability. Operating in a rapidly expanding industry, IODM is well-positioned to capitalize on the increasing demand for accounts receivable automation, particularly in markets that involve high volumes of cross-border transactions. The platform is highly scalable, which allows IODM to expand into new regions and industries with minimal additional costs, making the business model highly efficient with a great degree of operational leverage.

IODM’s financial performance reflects this potential, with cash receipts for fiscal year 2024 at AU$2.05 million, marking a 70 percent increase over the previous year. This impressive growth is driven by the company’s ability to secure recurring revenue streams through its flexible pricing models.

Depending on the client, IODM utilizes either a revenue share model or a license-based model. In the education sector, revenue is primarily generated through a percentage of payments processed via foreign exchange providers like Convera. For enterprise clients, IODM typically charges an annual license fee for access to the platform. This combination of recurring and performance-based revenue streams ensures a steady financial foundation for continued growth, making IODM a compelling investment opportunity.

Company Highlights

• IODM is a cloud-based accounts receivable communications platform designed to automate and streamline cash collection processes within the terms of trade.
• The platform seamlessly integrates with ERP systems like Oracle, SAP, Microsoft Dynamics and Xero, reducing the need for manual invoicing and follow-ups.
• IODM targets medium to large companies and can handle seamlessly those with multiple divisions with multiple reporting functions
• IODM has been successful in universities and enterprises, with a focus on managing complex billing cycles and cross-border payments.
• The company is already used by ten UK universities, with plans to expand into North America, Asia and Greater Europe.
• IODM operates with a scalable revenue model, combining revenue share and license-based pricing to cater to different customer segments.

Key Product

IODM Connect

IODM’s flagship product, IODM Connect, is an intelligent accounts receivable platform that enables businesses to automate invoice reminders, payment collections, and cash allocation processes. The platform integrates seamlessly with major enterprise resource planning (ERP) systems such as Oracle, SAP, Microsoft Dynamics and Xero, allowing organizations to adopt the solution without significant disruption to their existing financial workflows.

One of the primary advantages of IODM Connect is its ability to automate many of the time-consuming tasks involved in accounts receivable management. For example, the platform can send automated reminders to customers when payments are due, reducing the need for manual follow-ups and improving the efficiency of cash collection.

In addition to its automation capabilities, IODM Connect offers advanced cash allocation and reconciliation features. These features enable businesses to match payments to invoices more accurately, reducing the risk of errors and ensuring that accounts are balanced in a timely manner. This is particularly important for organizations that manage high volumes of transactions or deal with cross-border payments, where the complexity of reconciling different currencies and payment methods can be a major challenge. IODM Connect simplifies this process, allowing businesses to focus on their core operations rather than the intricacies of accounts receivable.

The platform is also highly scalable and customizable, making it suitable for businesses of all sizes and industries. As organizations grow, they can easily add new divisions, jurisdictions, and payment methods to the system without the need for a major overhaul. This scalability, combined with the ability to integrate with third-party payment platforms, enhances IODM Connect’s value proposition by allowing businesses to manage both domestic and international payments efficiently. Overall, IODM Connect provides a comprehensive solution for automating and optimizing accounts receivable processes, helping businesses improve cash flow, reduce operational costs, and streamline financial management.

Target Market: Universities and Enterprise Clients

IODM primarily targets universities and large enterprises that deal with complicated billing cycles, often involving cross-border transactions. The education sector, in particular, has emerged as a key focus, with IODM assisting universities in managing payments from international students. The system is designed to streamline invoicing, manage payment reminders, and handle multiple currencies and languages, which is essential for institutions with students from various countries.

As of September 30, 2024, IODM had onboarded ten universities in the UK, including prominent names like the London School of Economics and Coventry University, with an additional 18 universities in the onboarding process. This represents a substantial portion of the UK’s higher education market, where one in four students are international, contributing to a total market size of approximately 679,000 students. IODM’s immediate target is to service around 242,000 of these international students, capitalizing on the growing demand for efficient payment management.

The rising number of international students in regions like Europe, North America and Australia is a major driver for IODM’s growth. With 2.1 million international students across the US and Canada, and over 679,000 in the UK alone, IODM is aiming to tap into a substantialglobal market.

Universities face challenges in managing tuition fees, accommodation charges, and other associated payments from international students, especially in the wake of fluctuating exchange rates and cross-border transaction complexities. IODM’s platform simplifies these processes, making it easier for universities to manage their cash flow while reducing administrative burdens.

Strategic Partnerships

IODM has secured key global partnerships that have accelerated its growth. In the education sector, the company has partnered with Convera, formerly Western Union Business Solutions, to manage cross-border payments efficiently. This partnership has been instrumental in expanding IODM’s reach in the UK and EU, allowing universities to process payments seamlessly through the Convera platform.

In addition to Convera, IODM has entered a partnership with Corpay, (NYSE:CPAY), which specializes in cross-border payments for North American enterprise clients. This partnership opens new opportunities for IODM in sectors such as manufacturing and global logistics.

These strategic partnerships enable IODM to scale globally without the need for large regional sales teams, leveraging existing client relationships to accelerate growth.

Market Drivers

The demand for IODM’s platform is being driven by several key factors, particularly in the education sector and among enterprises managing international transactions. One of the most significant drivers is the rising number of international students, especially in regions like Europe, North America and Australia. Universities are increasingly seeking efficient solutions to manage the complexities of cross-border payments, which often involve fluctuating exchange rates and varied payment timelines. This creates a strong need for platforms like IODM that can simplify and streamline these processes.

Additionally, with the cost of doing business rising due to inflation and increasing interest rates, universities and enterprises are under pressure to improve their cash flow management. Collecting payments in a timely and efficient manner is becoming more critical, making accounts receivable automation a key priority for organizations looking to maintain financial stability. The economic environment is forcing institutions to focus on cash collection as a means of optimizing their operations, and IODM’s platform addresses this need by automating many manual processes, reducing errors and accelerating payment collection.

Management Team

Mark Reilly - Chief Executive Officer

Mark Reilly is a chartered accountant with over 30 years of experience in the banking and finance sectors, particularly in advisory roles. Before joining IODM, he worked at Coopers & Lybrand (now PwC) in insolvency, and later founded his own accounting practice. Reilly has held director positions at Black Star Petroleum, Harvest Minerals, and Ochre Group. His expertise lies in advising organizations of all sizes on growth strategies, corporate restructuring and valuations.

Petrina Halsall - Chief Operating Officer

Petrina Halsall joined the company in 2023 and brings a wealth of information technology experience. She has worked in critical IT roles across the FMCG, automotive, transport, logistics and public sectors. Notably, she served as head of IT for the Victorian Department of Treasury and held leadership positions at GUD Holdings for seven years. Her extensive background in managing business-critical infrastructure and certified security makes her a key asset for IODM’s operational efficiency.

James Burke - Chief Technology Officer

James Burke has extensive experience in overseeing complex technological infrastructures and security systems. Before joining IODM, Burke held roles that focused on critical infrastructure management in various sectors. His leadership and technical skills in IT security have played a crucial role in developing and maintaining the robust technological infrastructure at IODM, helping the company achieve scalable growth.

Graham Smith – Head of Operations UK and North America

Graham Smith has over six years of experience in the financial services industry. Prior to joining IODM, he worked at Western Union Business Solutions in various roles, including regional manager for channels and partnerships. Smith’s expertise in managing partnerships and expanding business into new regions is central to IODM’s continued growth in these key international markets.