Post-war development of new forms of financing
The structure of a (network of) local Financing Companies using “The ABPaymentflows © Financing Concept” connects technically and historically to a development towards asset based financing that has been evolving since the war. Originally financing activities of banks were standard unsecured as the legal and informational framework was near absent and/or not yet as sophisticated. The risks of trade finance were mitigated by following very carefully the activities of commercial companies. Following the development of an adequate legal framework mortgage based finance thrived and a separate financing market came into existence. Leasing of cars and machinery followed after its separate asset status was unambiguously secured by relevant regulation between ownership and use of (capital) goods. Since such goods do not allow for a mortgage base, another structure was found in order that financing could be viewed as “Asset-based” all the same. Deep knowledge of the second hand market and a focus on spreading risks (on a statistical basis) lead to a factual asset base and the possibility of attractive pricing of financing. A not specialized party (e.g. a universal bank) is unable to perform such task. On their turn specialist parties engaging in specialized finance may be funded by universal banks, as is the case in many instances. In short The IHF-credit © finds its rationale of existence on the same basis as what happened with other fundable assets since the war: thanks to automation and new insights the business model of ABPaymentflows © leads to, in financing terms, a relevant new asset base on the SME’s balance sheet.