Many of our clients are seeking to diversify their profit sources from large corporates to the Small and Medium Sized Enterprises (SME) sector. This is because margins are being squeezed at the top of the market, while there is much governmental and international pressure for banks to support smaller businesses.

The challenge of an SME client base, however, is scale. Traditional credit assessment and engagement methods do not work at this level. GBRW have therefore helped a number of leading emerging market banks with how to develop and execute an SME strategy.

One product class that could add real value is Asset Based Finance. Where businesses struggle to smooth their working capital flow, with value tied up in invoices and other assets, emerging market banks have an opportunity to offer certain products to help to release this ‘trapped capital’.

The two main types of Asset Based Finance are:

» Factoring and Invoice Discounting: when a financial institution (FI) provides funding against a business’s unpaid invoices. The FI can also provide a degree of customer management (such as handling the sales ledger or collections), or remain anonymous in the background so the business’s customers are not aware.

» Asset Based Lending: where funding is secured against a more general set of business assets such as debt, stock, plant and machinery, etc.

Certain products, such as Reverse Factoring, can even offer a relatively easy way for banks to enter the SME market with lower credit assessment and operational burdens.

GBRW, along with our expert partners, Loxbear Advisory, can help you to identify the best products for your market, show you how to structure them to create the optimal risk-reward balance, explain the operational aspects of how to practically set up a programme, and train you on how to market them to your target clients.

We pride ourselves on our practical expertise, underpinned with real-life experience earned in the field throughout our careers. We are passionate about working collaboratively with our clients, and are committed to sharing our knowledge with you.

Learn more about our approach to Asset Based Finance Solutions by downloading this capability statement »