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januari 2017

Comment on the article “The Future of Small Business Lending” as posted in December 2016 by the Moody’s Analytics team in “Risk Perspectives”.

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Comment on the article “The Future of Small Business Lending” as posted in December 2016 by the Moody’s Analytics team in “Risk Perspectives”.

We highly appreciate the thorough research of the Moody’s Analytics team concerning the actual state of SME lending possibilities and the clear analysis leading to the formulation of the conditions that allow for successful SME lending in the future.

During the last three years, we developed a business concept that answers the conditions so neatly described in the article. We are based in The Hague, The Netherlands (ABPaymentflows – Asset Based Paymentflows) and Brussels, Belgium (“YCS” short for Your Capital Support).

We are launching our YCS application in January in the Benelux countries planning for a subsequent full-fledged roll-out in Europe and beyond.

The conditions as described by the Moody’s Analytics team that allow for feasible SME financing are fully met by the design of our business concept. Therefore, we feel we are very well served by the analysis of Moody’s, as this highly professional institution practically defines the criteria to endorse the concept.

Below we address the challenges as formulated in the Moody’s article pointing out the response to these challenges as incorporated in our business concept.

  1. Streamline the collection of borrower information. Lenders commonly complain that small business information does not provide sufficient detail to make a lending decision.

The YCS application is precisely the kind of advanced software-as-a-service (SaaS) system that provides a single, integrated solution for managing the entire credit life cycle, enabling easy and quick processing of data. The design of our a application facilitates the extension of the “IHF-credit”. The IHF-credit, short for “In-house Financing Credit”, is an Asset-Based Financing concept remotely echoing old-school invoice financing concepts. The necessary borrower information is indeed streamlined up to the smallest detail and processed in a fully automated way in order to prepare for lending decisions.

  1. Leverage proven rating models for standard loans.

To confront this challenge, our business concept was designed differently from suggested by the Moody’s team. The Moody’s article focuses (implicitly) on the conditions for a general lending practice, not differentiating between the different asset categories that may serve as collateral. In fact, asset-based finance has been the increasing focus of development in business lending since the 1950’s. Starting out with mortgage based finance, the first mature segmented asset based lending market came into existence. Leasing of cars and machinery followed, after its segmented asset status was unambiguously secured by relevant regulation. Invoice financing was a logical next step in the development. However, the development of this segment suffered from the lack of concrete possibilities to track and (legally) collateralize the invoices, resulting in a compromised status and high pricing.

Based on current digital possibilities, automation and an ingenious structure, the IHF-credit invoice financing concept overcomes the suggested need of a “substantial and reliable dataset reflecting

historical small business defaults”. Instead, the (learning) data set of the SaaS system itself provides for a wide range of cross-sectoral and longitudinal confrontations that allows to focus on the specific risk assessment of the lending exposure. Furthermore, it is independent of arbitrary sector categorizations and subjective interpretations like the state of the business cycle, sector developments and other. Rather, the system statistically predicts a specific business default, based on its idiosyncratic data instead of deriving the default chance from the subjective and ponderously (man-processed) application of general historic data to the specific client base.

  1. Update processes. The key issue here is the time it takes for a lender to process a loan application and disburse funds – the time-to-money.

Since the IHF-credit is based on the flow of invoices on a fully automated basis, the time-to-money is determined by the technical process of connecting the systems and standard administrative procedures. The initial (quantative) risk-assessment process is standardized and is accompanied by a short procedure of qualitative assessment of the SME’s management. The structure simultaneously guarantees a fully automated monitoring activity allowing for a learning early-warning algorithm that may serve just as well as a basis for monitoring and risk assessment of financing that is related to other asset based financing segments.

The concept comprises the credit activities to be developed on a local basis, presuming that the information available within the local community will contribute implicitly and explicitly to the qualitative (initial and monitoring) assessment.

  1. Upgrade infrastructure. Systems-related efforts should focus on removing duplicate tasks (e.g., multiple instances of keying in the same data)

Since the system is fully integrated, duplicate tasks are non-existent. In fact, the overall cost of ownership is reduced to the level that pricing of the IHF-credit will be very attractive considering the actual conditions of (invoice) financing, especially in the SME segment.

  1. Learn from the data. High-performing organizations will extract meaningful data to understand key performance indicators and meet audit and reporting requirements.

The Saas platform will incorporate the information flow on a continuous basis. Specific tools for analysis make use of the most meaningful data and allow for a learning system. Strict discipline and well-defined processes are guaranteed by the fully automated processing of the data and ensure that the data is accurately captured and maintained.

Extra features of the YCS platform

The YCS Saas platform, to be launched and commercialized in the upcoming months, covers the challenges as formulated by Moody’s analytics in said article.

In fact, the Saas application, in conjunction with the business concept, allows for several extra features resulting in an efficient lending platform serving the SME financing need (with attractive pricing).

Examples of such extra features are:

  1. The combination of a central platform handling data assessment independently and main stream governance with local entities that maintain a direct relation with the SME’s, guaranteeing a community based information buzz and the possibility to interact manually in exceptional situations.
  2. Invoice management leading to insight and cost-consciousness improving DSO performance at the level of individual SME’s.
  3. Optimal objectivity and transparency is guaranteed regarding to the credit assessment process and monitoring of the process. It follows that other specialized lenders can anticipate the (IHF-) lending potential of the SME under scrutiny, leading to a balanced, compartmented financing structure of SME’s, the compartments corresponding to the available assets of the SME. Financed will thus take place in loan segments in function of the composition of the SME’s specific asset structure.

Conclusion: Our view of the future of SME financing

We enthusiastically agree with the main conclusions of the Moody’s Analytics article “The Future of Small Business Lending”. We pointed out that our business concept deals effectively with the challenges as formulated in the article.

It appears from the literature that a huge percentage of the SME financing need, ranging from 25% to 50%, is related to invoice financing. Therefore, to crack the code of efficiently serving that specific financing segment, leads the way to serving the SME business lending needs best.

Expanding that view, we hold that the future of SME financing is balanced, compartmented asset based financing. That is, financiers specializing in specific asset categories will finance the parts of the assets of the SME of their interest and specialization. In this view, the total set of lenders specializing in specific asset related lending products, combined with general financiers of equity and an array of mezzanine financing forms, will serve the total finance need of the SME.

Since all financeable assets on the balance sheet represent foremost stock quantities, whilst the invoices are a clear-cut flow category comprising real time information on a continuous basis, other financiers may well want to draw on the YCS Saas data to enrich and advance their monitoring and early warning credit assessment systems.

ABPaymentflows BV

Gerard Markerink

Rudi Hendrickx

Tjebbo Kessler

Launch of the IHF-Credit

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SME Finance – Small Business Owners and Investors Well Served

Is there a new way for small business owners to meet their working capital needs and grow their companies in a flexible way, at low cost, with automated systems and without the whims of discretionary bank processes? Yes, YCS facilitates the IHF-Credit, an advanced form of platform based invoice financing.

With the introduction and commercial roll-out of the IHF-Credit Your Capital Support (YCS) creates a symbiotic relationship between investors and SMEs. For funding investors, YCS provides an opportunity to invest in local SMEs with next to nil / low risk and fair returns. For small business owners, YCS provides invoice based corporate roll-over loans that help them meet working capital needs and grow their companies.

The IHF-Credit – Lending to SME companies at break-through interest levels

SMEs receive financing from YCS in the form of an advance of 85% on outstanding invoices—calculated to a fixed amount and tracked per batch of invoices. The batch is made after AI has been applied. The SME pays YCS an interest of 6.5% (Annual Percentage Rate) ( current interest rates as per 27-8-2017) over the advance amount, over the period during which the invoice is unpaid. Investors receive a portion of the interest rate as remuneration.

What is new?

  • Debtor portfolio financing WITHOUT transferring ownership of invoices
  • Detailed insight into an SME’s debtor portfolio and debtor payment behavior
  • Professional (Human ware) support for SMEs to ensure invoices are legitimate and paid in time
  • Real time monitoring of invoices and payment speed, leading to DSO calculations and alarm signals. Besides the health development of the SME is monitored on a continuously daily basis..

What are the main differences with actual invoice lending models?

1. Old School financing vs New School financing resulting in easy access and low interest rates

Old School invoice financing versus YCS

  • Push   versus   Pull
  • Hierarchy   versus   Symbiotic
  • Central & Global   versus   Local & Global
  • Stock of info   versus    Flow of info
  • Profit Maximisation   versus   Symbiotic and SME-focus network partners
  • Possession   versus   Service
  • Corporate   versus   Community
  • Personnel /management   versus   ZZP, strategic alliances
  • Assets   versus   Access
  • Nationalism versus   Global communities
  • Work-life balance 24/7   versus   Work-life balance lifetime
  • Fragile   versus   Anti-fragile

2. Fintech 1.0 versus Fintech 2.0

Whilst Fintech 1.0 has brought only minor disruptions to the banking market, mainly in the areas of payments, credit and personal financial advice, advances in technology and growing investment in fintech set the scene for more radical change like in the case of the YCS business concept[1].

It appears from the literature that a huge percentage of the SME financing need, ranging from 25% to 50%, is related to invoice financing. Therefore, to crack the code of efficiently serving that specific financing segment, leads the way to serving the SME business lending needs best. In this case Fintech 2.0 means a “seamless specialisation” across a core element of the value chain whereby several providers combine to deliver a cheaper and easier-to-use proposition to end customers in the field of Invoice Financing.

What is different.

The YCS online platform is the central hub from which YCS financing is managed. It is a completely web-based platform that consists of two connected environments[2]:

The Invoice Managers: Online invoice management software—used for sending, tracking and following up on Client invoices. The platform of The Invoice Managers is accessible by:

  • Clients: to submit, track and comment on invoices
  • Client Debtors: to view and comment on invoices
  • Human-ware of The Invoice Managers: to track invoices and perform follow-ups
  • Human-ware of YCS: in rare occasions to review invoices, process, disputes

YCS-Financing: Online financing software—used for approving and granting loans, managing clients, and administering funds. The backbone of YCS-Financing is a secure, replicated environment based on blockchain technology.

The two environments are structurally integrated, but functionally separated.

Next steps-The IHF-Credit Fueling Economic Growth

YCS will launch its service in September this year with a limited number of clients. Collaboration with Belfius Bank of Belgium secures a smooth and secure start. In the fall of 2017 YCS expects to enter into business relationships with different funding institutions to roll-out massively the IHF-Credit. YCS is eager to share the granting of IHF-Credits with specific interest groups starting a series of “YCS-local” financial companies. Also major banks have expressed their interest in the new possibilities we offer them. These groups of entrepreneurs, financiers and (semi-)government entities may want to run their own IHF-Credit activities on behalf of their focus clients (with common features like geographical concentration, adherence to a specific sector or similar communal interests). As the risk capital and leverage financing in the “white label” structure is provided for by the relevant financial institution and/or the YCS structure, in the case of a local YCS a limited amount of risk capital should be provided for by the local sponsors.

In sum, SME companies, Investors and the Society at large in the form of potential economic growth are all bound to benefit from the IHF-Credit!


Summarizing (What’s in it for me?)


  • Revolving IHF credit facility that automatically adjusts with turn-over swings
  • Symbiotic relationship between platform and SME instead of a hierarchical commercial dependency relationship
  • Break-through low interest rate levels due to risk reducing platform technology and business modelling
  • Automated credit process leading to quick and independent monitoring of the IHF credit avoiding undue human discretionary involvement
  • SME makes part of an economic ecosystem comprising of local or industry/sector interest groups adding network benefits and increased business know how
  • Combination of digital processing and human-ware enhancing the quality and stability of the ecosystem

Local investors & (semi) governmental entities and Banks

  • A new opportunity for banks to service the PME’s with financing with acceptable interests but also with acceptable costs and thus again profitable
  • A symbiotic relationship between local investors & (semi) governmental entities and Banks improving the service level to the SME’s
  • Opportunity to invest in local SMEs with next to nil / low risk and fair returns
  • Opportunity for (semi) governmental entities to concentrate on and boost growth and business stability of its SME cluster of interest reducing their cost level and extending their lending potential
  • A possibility for the European Investment Bank and Central Bank to fund the real economy in a transparent way and with a new instrument to monitor the industrial hart beat.

Society at large (potential of economic growth, business stability, cost level and employment)

  • Stability of the business environment leading to higher potential growth
  • Lower business cost level leading to increased societal prosperity
  • Over-all competitiveness increases


[1] “The Future of Small Business Lending” as posted in December 2016 by the Moody’s Analytics team in “Risk Perspectives” (April 2017) .

[2] A combination of Software and Humanware promises to be the winning structure for successful business models

Kredietaanvragen voor MKB’s online met YCS

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Kredietaanvragen voor MKB’s is een tijdrovend proces met veelal een negatief resultaat, het afwijzingspercentage loopt op tot boven de 30%. Deze 30% is exclusief de groep MKB’s die zich al heeft gewend tot alternatieve kredietverstrekkers omdat een kredietaanvraag bij reguliere banken sowieso tot afwijzing zou leiden door de door banken gestelde criteria. Veelal ligt het probleem in het aanleveren van benodigde informatie door MKB. Het proces is daarbij tijdrovend, kostbaar en ondoorzichtig. Er is een oplossing voor dit probleem op de markt gebracht door YCS (Your Capital Support NV), waardoor het aanvragen van krediet door MKB’s transparant en eenvoudig is en het proces bij de verstrekker efficiënt, transparant en tegen lage kosten voltooid wordt; het IHF-krediet.

Het IHF-krediet (In House Financing Krediet) is een concept van YCS waarbij het aanvragen en verlenen van krediet aan het MKB is aangepast aan het digitale tijdperk. De aanvraag wordt door de MKB-er zelf gedaan middels een online platform op een moment dat het de aanvrager uitkomt. Het platform/het systeem beoordeelt de aanvraag quasi-automatisch op de kwantitatieve input van de aanvrager en geeft direct de hoogte van het eventueel te verlenen krediet. De acceptatiecriteria zijn volledig transparant doordat deze op kwantitatieve input berust en gebaseerd is op de debiteurenportefeuille van de aanvrager.

Het IHF-krediet is beschikbaar in 2 vormen voor het MKB. Dit kan via een “lokaal YCS-initiatief”, waarbij het IHF-krediet kan worden toegepast door iedere groep kapitaalkrachtige ondernemers met het doel om MKB’s, via de “Bank-as-a-Platform” van krediet te voorzien, of via een “bankplatform als BPO-dienst” voor een bank, waarbij YCS de gehele MKB-kredietbeoordeling – op kwantitatieve grondslagen – en het beheer van het krediet van de bank overneemt. Middels deze twee vormen van IHF-kredietverstrekking stelt YCS niet alleen banken in staat om bestaande- en nieuwe MKB-klanten te voorzien van een krediet tegen lagere kosten, maar ook worden fondsen, participatiemaatschappijen en andere “initiatiefnemers met focus op MKB” door YCS in staat gesteld om IHF-kredieten te verstrekken aan MKB.

Inmiddels is YCS gestart met het verlenen van haar diensten in de Benelux.

Over YCS – Your Capital Support N.V.

YCS NV heeft haar hoofdkantoor in Zaventem en heeft als doel alle MKB’s die zich kwalificeren voor het IHF-krediet te bedienen. YCS verleent zelf IHF-kredieten in België. Daarnaast worden 2 distributie vormen in stelling gebracht zodat bestaande MKB’s met kredietbehoefte snel bij hun eigen bank of bij een lokaal initiatief haar kredietaanvraag kan indienen. Voor beide vormen wordt het centrale “Bank-as-a-Platform” voor kredietverlening en het operationeel beheer gebruikt. YCS richt zich voornamelijk op kredieten vanaf ca. €250.000, –.