Most Innovative In-House Financing Firm – Netherlands

By 2 maart 2023What's new

AB Paymentflows (ABP) offers SMEs, particularly those with poor credit, the highest quality credit at the best price. This is done through a variety of tasks and services, including its new IHF (In-House Financing) credit application, which provides a new asset-based financing category to enhance financing possibilities for SMEs. In light of the firm being recognised within the Technology Innovator Awards 2022, we learn more about how it helps its clients.

Gerard Markerink leads AB Paymentflows, a company enriched by his roots within NIBC in The Hague and ING Mergers and Acquisitions. Gerard is an independent finance professional and has been an M&A specialist since 1990. Indeed, he a veteran within the industry, a pro-active and solution-driven entrepreneur who leads his team with great commitment and expertise.AB Paymentflows has been a licensed company since 2018, with Gerard and his team on a mission to help SMEs who encounter difficulties when it comes to attracting funding within the current economic phase, with several developments such as retracting movement of banks, stricter requirements of loans, and adverse payment conditions contributing to their financial struggles. It is ABP’s mission to offer the SME the highest quality credit at the best price through its YCS (Your Capital Support) platform, with its strategy to achieve this being its new IHF credit form in addition to execution of various tasks and related services.

Asset-based finance has been the increasing focus of development in business lending since the 1950s. Mortgage-based finance came first, then the first mature segmented asset-based lending market. Leasing of cars and machinery followed, after its separate asset status was explicitly secured by relevant regulation. Invoice financing was a logical next step, however, this suffered from a lack of concrete possibilities to track and (legally) collateralise the invoices, resulting in a compromised status and high pricing.

Originally, financing activities of banks were as standard unsecured due to the legal and informational framework being near absent and/or nowhere near as sophisticated as today. However, the risks of trade finance were mitigated by very carefully following the activities of commercial companies. As a result, soon came the creation of an adequate legal framework mortgage-based finance which thrived, and a separate financing market then came into existence.

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 default”. It is a system that statistically predicts a specific business default, based on its idiosyncratic data, instead of relying on biased and tedious man-processed application of historic data.

Since IHF credit is based on the flow of invoices on a fully automated basis, the time-is-money concept is determined by the technical process of connecting the systems and standard administrative procedures. The initial quantitative risk assessment process is standardised and 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.

ABP partnered with Moody Analytics to explore the actual state of SME lending possibilities, from which a clear analysis was developed, and advice was received on the conditions that allow for successful SME lending in the future. These conditions as identified in Moody Analytics’ report have allowed ABP to develop a suitable and efficient business concept to ensure feasible SME financing.

Thus, AB Paymentflows developed its YCS application via Microsoft Azure in cooperation with Newco YCS. The YCS app is just the kind of advanced SaaS system that provides a single integrated solution for managing the entire credit lifecycle, with SMEs able to have two bank accounts each, enabling easy and quick processing of data. The design of this application facilitates the extension of the IHF credit, and the necessary borrower information is streamlined up to the smallest detail and processed in a fully automated way in order to prepare for lending decisions.

AB Paymentflows developed the IHF-credit (Licence 1) and recently Licence 2 for every bank via Newco YCS, for large loans, based on e-invoicing for own return and at (zero) risk of the bank. Two bank accounts are delivered for obvious reasons, per customer.

Banks receive the service included in Licence 2 for large loans, which has been developed for companies that statistically don’t comply to the IHF-credit, with a turnover between €4 million and €15 million to €20 million, as well as for those who want to have five- to ten-year one-time large annuity. The bank is the funder and sets the price for the price and profit margin, and the risk for this loan is next to nothing with hardly any supervision necessary.

The community is used as the bank organisation. The bank has an inlog in the community of two bank accounts and Newco YCS has an inlog for the credit question for Licence 1.

Communities, hardware partner in the system as the banks, deliver – for example, including companies that sell bookkeeping programmes to its customers and provide e-invoicing to them – are partners with Newco YCS and licence company, ABPaymentflows in order to provide their clients, who are already living in the digital age, access to the YCS system.

All banks can use Licence 2 for its own customers. Per country is one bank needed to execute Licence 1 together with the community and Newco YCS.

If you would like to learn more about AB Paymentflows, and serve SME customers better than ever before, please visit the company website.

Company: AB Paymentflows
Contact: Gerard Markerink