Credit in the form of an APP
Customers who are rejected by regular financiers (banks in the first place) for reasons of lack of profitability, a lack of collateral or a lack of resilience, will in many cases qualify for the IHF credit through modelling historic events and performance based on a statistical analysis.

The application works, after the identity check, establishing the nature of the activities and modelling the track record through   an initial qualitative test on management, nature of the activities and track-record exclusively on statistics.

The customer creates an account, logs in, uploads his accounts and the application qualifies the customer fully automatically on the basis of the quantitative data. After an introduction and the qualitative check, the definitive connection to the app follows and the revolving IHF credit is granted. After that the invoices are issued and sent out, full automatic credit pre-payment follows systematically.

The benefits on a row:

• For convenience to be understood as factoring. But then “factoring 2.0”, based on big data. All the advantages of the IHF credit and low costs are so implied

• Statistical qualification based on history rather than inconsistent discretionary and costly qualitative assessment by bank employees

• Off Balance structure whereby credit criteria are not improperly influenced by Governance principles (with higher return requirements as a result)

• Conversion of the bank overdraft facility into the flexible, higher ranging and moving IHF Credit (automatically moving along with the turn-over development)

• Human ware supports the credit application; the result is that a “Agricultural Credit Cooperative” – like community is created with many further potential applications

• Focus on credit size between Euro 0.4 – 2.5 million

• Attractive not only for banks but also for regional development companies and port authorities and sector-driven institutes with a broad SME client base

• Risk reducing features of the app (blocked account, pre-financing ratio with buffers for insolvency, possibly a credit insurance) guarantee that there is a negligible risk for the funding whereby the interest rate % on the IHF credit for SMEs is spectacularly low and eventually may result in even lower interest rates over time

• On balance a much more efficient credit due to far-reaching digitization and an efficient follow-up; online and real time, Off Balance and suitable for banks, finance companies and institutions with a specific (regional or institutional) interest

YCS NV Brussels

During the last three years, we developed a Fintech business concept that meets the conditions as pointed out by Moody’s, and that answers to the analysis of Santander concerning their view on Fintech 2.0. Two articles that were written by their expert teams do connect beautyful to our Fintech business case with regard to their view of the shape of the Fintech future. We hold that the YCS business concept is in many ways the perfect answer to the requirements of the future, focussed on but not limited to invoice based lending.

Below we summarize our view on the Fintech future and our role in it with reference to the two cited outstanding articles that analyse the relevant conditions for future success and the recent developments of the Fintech market.

 References:

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

http://www.moodysanalytics.com/risk-perspectives-magazine/convergence-risk-finance-accounting-cecl/principles-and-practices/future-of-small-business-lending

The article “The Fintech 2.0 Paper: rebooting financial services” by Santander InnoVentures, in collaboration with its partners Oliver Wyman and Anthemis Group (June 2017.

http://santanderinnoventures.com/fintech2/

Below is a point-by-step introduction of the arguments mentioned in the articles and how the potential of the YCS initiative can be explained and understood. Quotes of the articles are mostly 1:1 copied from the original articles.

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

Answering Moody’s:

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 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.

 The answer to the following considerations of Santander:

(the YCS application incorporates…)

• Fintechs have two unique selling points: better use of data and frictionless customer experience
• Collaboration is the key: the strengths and weaknesses of both banks and fintechs mean that both will often do better by cooperating rather than by competing. New digital businesses must either grow quickly or die. Banks can offer fintechs immediate scale and critical mass through access to demand.
• Risk management and pricing: Collateral management is a key element of risk management. Better data on the quality and condition of collateral provides more accurate assessment and pricing of risk.

2. Leverage proven rating models for standard loans.

Answering Moody’s:

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 practise, 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.

The answer to the following considerations of Santander:

(YCS aims to be…) “Being smarter with smart data”

• Digital technology has greatly increased the volume of data available. However, the banks have found it difficult to use this new data to create value for their customers and themselves. In contrast, online retailers and social media firms have found ways to create value from data.
• Banks are not nearly creative or enterprising enough in their attempts to use data to offer better products or cut operating costs.
• Banks could take advantage of the specialised expertise at fintech companies by engaging these firms to perform the required work or by acquiring them. Partnerships between banks and fintechs would create a powerful combination of information, supplied by the bank, and innovative analytical tools, supplied by the fintech.

3. 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.

Answering Moody’s:

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.

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

Answering Moody’s:

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.

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

Answering Moody’s:

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.

The answer to the following considerations of Santander:

(YCS realises the condition of…) “Embedding distributed ledger technology (a distributed ledger is a network that records ownership through a shared registry)”

• In contrast to today’s transaction networks, distributed ledgers eliminate the need for central authorities to certify ownership and clear transactions.
• Transactions can be made to be irrevocable, and clearing and settlement can be programmed to be near-instantaneous, allowing distributed ledger operators to increase the accuracy of trade data and reduce settlement risk.
• Systems operate on a peer-to-peer basis and transactions are near-certain to be correctly executed, allowing distributed ledger operators to eliminate supervision and IT infrastructure, and their associated costs.
• Each transaction in the ledger is openly verified by a community of networked users rather than by a central authority, making the distributed ledger tamper-resistant; and each transaction is automatically administered in such a way as to render the transaction history difficult to reverse.
• Almost any intangible document or asset can be expressed in code which can be programmed into or referenced by a distributed ledger.
• A publicly accessible historical record of all transactions is created, enabling effective monitoring and auditing by participants, supervisors and regulators. It is only a matter of time before distributed ledgers become a trusted alternative for managing large volumes of transactions.
• Distributed ledgers can increase investor confidence in products whose underlying assets are now opaque (such as securitisations) or where property rights are made uncertain by the role of central authorities.

Conclusion: Our view of the future of SME financing

We enthusiastically agree with the main conclusions of the reference articles The Future of Small Business Lending” and “The Fintech 2.0 Paper. We pointed out that our business concept deals effectively with the challenges as formulated in the articles.

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.

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 a number of providers combine to deliver a cheaper and easier-to-use proposition to end customers in the field of Invoice Financing.

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.

In this view Banks should be clear about where their market advantages and institutional strengths lie and collaborate with the fintech industry where they fall short. The same goes for the fintech industry in general and YCS in particular: to achieve Fintech 2.0. collaboration with banks (and/or vested interests) incorporates wisdom, market expertise, trusted brands and if so required a banking licence.

Introduction to the workings of the YCS Platform

Scope of the IHF platform

Your Capital Support (YCS) provides SME loans in the form of accounts receivable financing without legal transfer of invoices as happens in the case of regular factoring.

In recent years, small business owners—especially those who rely on their invoices being paid in time—have suffered from a lack of access to capital. This has put a strain on what was once a mutually beneficial arrangement: entrepreneurs would borrow money to grow their companies and banks would profit through interest. Through the working of its platform YCS restores this symbiotic relationship.

Your Capital Support (YCS) is the Turnkey Provider of the IHF Credit

The services and software required to provide IHF Credit are offered by Your Capital Support (YCS). YCS acts as the linchpin between investors and SMEs with the following tasks:

• Partnering with investors as investment clients
• Lending the investment of capital funds and senior debt to meet financing needs of SMEs generating attractive returns
• Acquiring and overseeing SMEs as financing clients
• Operating the online platform to provide financing to SMEs

Target Audience

Your Capital Support (YCS) acts as a linchpin between funding investors and SME’s as a “double-sided platform”. However, SMEs are the Clients, because they make use of the “product” i.e. the IHF-credit.

Not every SME can make use of YCS financing. YCS will target SMEs that meet certain requirements during the application. The general requirements for SMEs are:

Size: YCS will follow local definitions of SMEs. The definition provided by the European Union—also used in Belgium for example—serves as a starting point for qualifying Clients:

• Micro-sized: Annual revenue of € 2 million or less
• Small-sized: Annual revenue between € 2 million and € 10 million
• Medium-sized: Annual revenue between € 10 million and € 50 million

Revenue Model: YCS financing is meant for SMEs that invoice their clients for goods and/or services. Businesses that charge upfront or deal in cash transactions are NOT a fit for YCS financing.

Years in Operation: YCS requires financial transparency. An SME’s financial history—spanning at least three full calendar years—is necessary to make an informed credit decision in regards to (A) whether to provide financing and (B) under which conditions.

Debtor Spread: To minimize risk, the general guideline is that ~80% of an SME’s revenue is generated by at least 20% of the debtors. An SME that receives a disproportionately high amount of revenue from a few clients is considered too risky.

Geography: YCS financing will initially be provided to SMEs in Belgium, with simultaneous plans to expand to The Netherlands and Luxembourg.

Adjustments and exceptions can be made—based on a qualitative conversation with a business owner—and these will be reflected in the contracts with Clients.

Revenue model for funders

Your Capital Support (YCS) will provide financing to SMEs with the help of capital investments (subordinated loans) and senior debt from private investors and institutional financiers. In Belgium, the intended remuneration for capital investments are currently under discussion in the range of:

• Capital investments (subordinated loans): Euribor + 3.5% per year
• Institutional financiers (senior debt): Euribor + 1.5% per year

The ratio between subordinated loans and senior debt will be at an acceptable level to give sufficient comfort to the funding partners. The pricing of the IHF-credit will be adjusted to local market conditions for funding.

Client Acquisition

YCS aims to be a financial partner for SMEs, enabling business owners to manage their working capital needs and facilitate growth for their companies.

Information is the cornerstone of YCS’s relationships with its Clients—and capital investors. SMEs provide in depth financial information and insight into their debtor portfolio. To secure the quality of SMEs, an initial credit assessment will take place according to a quantative and qualitative credit assessment procedure.

Organizational Structure / revenue model for strategic partners

To facilitate the start and roll-out of the YCS business model, strategic partners are foreseen that contribute to the roll-out of the model at a pan-European level and beyond. Intended strategic partners are financial institutions and business partners with local and/or international SME-scope.

http://ma.moodys.com/CAO_2016_11_Ad_AmericanBanker_Marp2_MAARP_Article.html

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.

2. 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.

3. 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.

4. 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.

5. 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

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?)

SME’s                                                              

• 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

References:

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

http://www.moodysanalytics.com/risk-perspectives-magazine/convergence-risk-finance-accounting-cecl/principles-and-practices/future-of-small-business-lending

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

https://www.slideshare.net/stevenvanbelleghem/when-digital-becomes-human-41191597/9

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, –.

News item of ABPaymentflows BV and Your Capital Support NV (established April 6, 2016)

ABPaymentflows BV (ABP), based in The Hague, is the initiator of the financing concept “In-House Financing” (IHF). This is a model of alternative financing, with credit granted especially to small and medium enterprises (Belgian and Dutch SMEs) that have little and/or difficult access to traditional bank financing.
The model and the two developed applications (commercial formulas) will be operated by Your Capital Support NV (YCS), based in Brussels. On our website (www.abpaymenflows.com) further information is provided about background, purpose, scope and implementation of the concept. In the foreseeable future, the YCS website will go life providing detailed and practical information about how to apply for credit and how to link up with the YCS platform (for investors / local initiatives).
The new ABP / YCS “FinTech” application has a major impact on the credit markets they are targeting. In summary, we foresee the following key differences to current business models.

Differences between “Old School Banking” and the New YCS/We-banking models are summarized.

Old School Bank                                                         YCS /We-banking

Push                                                                              Pull

Hierarchy                                                                      Circular

Central & Global                                                          Local & Global

Stock of info                                                                 Flow of info

Profit Maximisation                                                    Sharing

Possession                                                                  Service

Corporate                                                                     Community

Personnel /management                                           Free-lance, ZZP

Assets                                                                            Access

Nationalism                                                                  Global communities

Work-life balance 24/7                                               Work-life balance lifetime

Fragile                                                                            Anti-fragile

In the coming 3-5 months all necessary software will be completed, tested and connected to existing systems. The 1st credits during the pilot period will be provided by mid-April. Lending, facilitated by a flexible working platform, should be smooth and good working in 3-5 months after which the roll-out program will be started.
The roll-out program concerns the connection of the YCS platform to independent local and institutional initiatives (the two formulas YCS and WE-banking) in order to enable the centrally operating YCS platform to provide the necessary services to these parties. Activities will operate under a governance regime that includes general rules. However, a number of dimensions of credit policy will remain at the discretion of the local parties.
This discretion of the credit policy for local and institutional parties is reflected in the level of risk / reward choices that can be made with regard to the credits provided to SMEs and the associated level of the interest rate that may be charged. The central organization will review the credit policy of the local and institutional parties adjusting the appropriate leverage of leverage funding that will be made available: the lower the chosen risk profile the higher leverage funding that will be made available.

The Governance regime is so attuned to the interests of SMEs and local YCS initiatives and the YCS platform as to safeguard the balance.
The goal to provide as many SMEs with credit can only be achieved if there is venture capital available for local initiatives. This capital will be made available on the basis of local interests groups of entrepreneurs and institutional investors having a keen interest in a thriving SME market segment that is financed in a balanced way. The venture capital is rewarded with good return prospects at a low risk profile. Through the working of the YCS platform, including the provision of leverage capital at attractive terms and the governance rules, attractive low interest rates for SMEs can be linked to a high return for the venture capital that will be provided to the local initiatives.
We will report on our website once significant Milestones have been achieved.

Gerard Markerink, Den Haag, Corporate banker with roots with NIBC in The Hague and ING Mergers & Acquisitions. Independent finance professional and M&A specialist since 1990.

Tjebbo Kessler, Den Haag, Corporate banker with roots with NIBC in The Hague and University of Applied Sciences in Amsterdam. Independent finance professional and lecturer since 1998.

Rudolf Hendrickx, Brussels, is CEO of several companies in Belgium, France and Africa and is an Independent Business Developer. Rudi holds university degrees in Law, Finance, International Relations, Internal Auditing and Financial Management.