The ACAB “Accessible Credit for All Businesses” project, aimed at the financial-banking sector, seeks to implement innovative scoring tools for credit risk assessment and to develop a comprehensive set of indicators for factoring services using AI technology.
Factoring services represent a financial solution through which a company sells its outstanding invoices (receivables) to a specialized institution called a “factor” (usually a bank or a factoring company). In exchange, the company immediately receives a portion of the invoice amount, which improves its cash flow.
In short, factoring:
- Helps companies obtain money quickly without waiting for the payment terms agreed with their clients.
- Reduces the risk of non-payment, as the factor can take on the risk of non-collection.
- Includes services for managing receivables, such as tracking and collecting payments.
It is mainly used by small and medium-sized businesses to ensure the cash flow needed to carry out their operations.
The ACAB project will allow micro-enterprises (family associations, neighbourhood stores, 1-2 person companies) to have easier access to financing without resorting to personal loans or credit card obligations. This type of micro-enterprises usually does not have the lending capacity, unlike medium/large enterprises.
Small businesses and other personal enterprises are the driving forces of national and European economies, which are still recovering from the impact of the COVID-19 pandemic and feeling the strain of inflationary pressures. These sectors are primary contributors to tax bases and are crucial for the day-to-day functioning of our society, providing both jobs and essential basic services. However, there are significant obstacles for such entities to obtain loans, especially for those at the early stages of business development or with limited resources.
Due to the lack of credit history, collateral, and perceived risk, banks are reluctant to provide loans to microenterprises.
ACAB aims to change this perception by developing a new model for credit risk assessment. Thus, the ACAB project will implement an innovative two-tier model for estimating credit risk: the first tier is dedicated to identifying common evaluation factors from various financing-specific datasets, unique to each country. The second tier focuses on the regional applicability of these factors through innovative predictive indicators for credit decisions, combining the credit history of microenterprises with the personal financial data of their owners.
ACAB Accessible Credit for All Businesses is co-funded through the EUREKA – EUROSTARS program and UEFISCDI.
The Romanian company Software Imagination & Vision (SIMAVI) is involved in the design and implementation of the software solution, working in partnership with well-recognized companies in the financial-banking sector – Flexidea from Poland and AAI Labs from Lithuania.