Capital solutions for big and small. The Credit Suisse corporate ecosystem makes it possible.
Credit Suisse offers its corporate clients a comprehensive range of products, systematically supplementing them with third-party services to create an entire ecosystem. It includes capital solutions like corporate loans but also covers administrative services such as accounting solutions.
From corporate loans to payment transactions: the Credit Suisse corporate ecosystem
To meet every need, Credit Suisse specifically relies on successful partnerships in the area of corporate finance. "That enables the bank for entrepreneurs to, first of all, concentrate on one of its core competencies – complex credit solutions for sophisticated clients," says Elios Elsener. The COO of Corporate Banking in Switzerland adds that, secondly, Credit Suisse can leverage its partners to cover the needs of smaller companies and expand its services for corporate clients.
That is why the bank for entrepreneurs has spent roughly the past two years striving to build a broad ecosystem with comprehensive products and services for its clients. One part of the Credit Suisse corporate ecosystem is the successful Swiss fintech company Tradeplus24, which offers supplemental credit solutions to relatively small corporate clients digitally and efficiently. Besides the credit specialist, Klara also belongs to the corporate ecosystem. The company's business software acts as a digital assistant providing services from insurance coverage to accounting. Credit Suisse also partners with CashWorks, still currently in its pilot phase. The purpose of the platform, integrated into payment systems, is to enable clients to pay their suppliers' invoices early, entitling them to cash discounts.
Hunting for a capital solution: Successful partnership with a Zurich fintech company
The CEO of Tradeplus24, Ben James, talks about an exciting market niche and a successful partnership.
Mr. James, you were just telling me that many fintech companies are working against banks. Why did you and Tradeplus24 decide to team up with Credit Suisse?
I personally spent a long time working in the banking business. I realized there was a gap in the area of lending around the world because the needs of relatively small clients are not being adequately met. We identified that niche and wanted to develop a product to fill it.
Exactly what gap are you referring to?
Often, banks do not offer specific credit solutions unless you need a certain amount – say, several million Swiss francs. Then there are numerous companies out there offering small-ticket, or low-value, loans. Yet, in between there is a gap that many banking institutions cannot cover. It involves credit amounts from several hundred thousand to roughly three million Swiss francs for a specific client segment.
Why is that?
Around the world, banks are facing demanding legal regulations as well as high costs. Lending to a small client is the same as lending to a big one, but the costs are considerably higher due to the increased risk presented by small clients.
What's more, the administrative effort and expense to verify the accounts receivable of small companies is disproportionate to the credit amount. So, that makes it difficult for banks to offer them a cost-effective solution. SMEs, however, are the backbone of every market, and many banking institutions know that. For that very reason, Credit Suisse is also making the effort to find a solution so it can serve that sector.
As a fintech company, what service are you offering with your product in conjunction with Credit Suisse?
We are supporting the bank for entrepreneurs with lending to SMEs by providing invoice financing solutions in the range from several hundred thousand up to five million Swiss francs in partnership with the bank.
"We appreciate our partnership with our forward-thinking partner. That is one reason why we are pleased to be extending our agreement with Credit Suisse for two more years."
Ben James, CEO of Tradeplus24
How does the capital solution offered by Tradeplus24 work?
We offer our clients loans in exchange for their accounts receivable. That means we take unpaid accounts receivable as collateral for the loan. For that purpose, we have developed a system that provides access to accounting platforms and, from there, can directly call up data on the outstanding accounts receivable of our clients. Our system analyzes the data. That is, it verifies the unpaid debt held by our clients, ensuring it provides suitable collateral for lending.
In addition, it handles the monitoring of each company's business activities efficiently and as affordably as possible. The product can also be run for any client and is almost completely automatic. That way, we have an up-to-date overview around the clock and can ensure lending for our clients.
Lending always involves a certain amount of risk. How can you overcome those kinds of challenges as a fintech company?
Our system works using algorithms that analyze outstanding accounts receivable as well as our clients' business history. It evaluates numerous factors – for example, how many receivables are unpaid, how many payments and reimbursements the company receives, how quickly the debtors pay, and which buyers have not paid. We consider various aspects of that history in order to understand our clients' business. The system is also linked to several global databases that help us to validate transactions between companies and buyers.
Furthermore, we work closely with our insurance partners, who set an insured credit limit. If the clients do not pay, the insurance handles payment up to the established limit. Our system applies a series of criteria to the accounts receivable of our clients. The criteria check whether they meet all the conditions of the policy and automatically exclude any outstanding receivables that do not conform. So, lending takes place only when suitable accounts receivable are available.
The Credit Suisse corporate ecosystem: a network with growth potential
According to Elsener, Credit Suisse's corporate ecosystem is still a growing alliance. "Although our network is already highly evolved, we want to refine our offering. We would like to enter into even more partnerships, become more digital, and offer our clients an even better experience," says Elios Elsener.
To that end, Credit Suisse is planning to expand its online collaboration with additional partners. For example, since November 2019, the bank for entrepreneurs has been working with b.Link, a SIX platform for standardized interfaces, in order to connect with existing members and offer their clients expanded, innovative solutions. For Credit Suisse corporate clients, they are expected to get faster, more efficient, and more useful in the future.