Fintech in the 18th Century

​On the wall of my office hangs a financing document, which opens as follows:

"This Indenture given the seventeenth day of March, in the thirty-sixth year of the reign of our Sovereign Lord, George the Third Of Great Britain, France and Ireland, in the year of our Lord One Thousand seven hundred and ninety six"

It is for the value of one hundred and fifty pounds , fifteen shillings and seven pence halfpenny (equivalent to £21,580 today)

It is in fact a simple assignment of book debts, precisely the mechanism we still use today in an invoice financing arrangement, drawn up before the Napoleonic Wars. More than that it was the classic case of individuals (not a bank or business) joining together to provide a loan to someone with cash flow problems. So you could say a forerunner of today’s Peer-to-Peer Lending!

I've spent over 35 years in the asset based lending industry and I've seen a number of significant changes but it seems we may have come full circle. During the early '80s most players were small independent houses often with a merchant banking background. Operationally as funders we were very much paper driven.

Gradually the main clearing banks began to extend their reach to put invoice finance alongside traditional overdrafts. Over the next few years Asset Based Lending was introduced by one or two US funders, until it became and now remains widely available. In the 21st century 'fintech' has taken off even further and the days of paper are now long gone with most data transferring electronically. Some funders in the current market claim to analyses hundreds of thousands of data points in making lending decisions, most of which are accessed without the client needing to lift a finger.

Yet despite what would seem significant changes to the product offering, the market has still not achieved what I believe is its full potential.

Some of the larger players now have moved away from the smaller SME market, driven by compliance, cost of capital restraints and the difficulty of changing old legacy operating systems. This has led to a number of smaller independents, filling the space, and amongst these changes we also have seen the explosion of Peer to Peer lending

So the lesson to be learnt is I suppose, to be adaptable , to embrace change but at the same time don't throw away all the knowledge gained along the way.

In a nutshell this is what is so exciting about joining Liquidity Club.

After 35 years in the lending world, working within given parameters and product sets, I now have the opportunity to look across the market for solutions to a range of funding problems that we are presented with. From trade finance, invoice finance and full ABL, to tax credits of R&D expenditure and overpayments in Stamp Duty; in short there aren't many funding requirements that we cannot present a solution for.

To learn more or for assistance raising finance for your business please contact Tim or one of the team here

Tim Corbett