For more than 30 years, Cologne-based abcfinance has met the leasing needs of its corporate clients, which are primarily small and medium-sized businesses. It finances a wide range of mobile business assets, from vehicles, machinery and furnishings to telecommunications and IT equipment through to exercise gear and tanning systems. 

 

abcfinance also offers factoring to help clients meet their short-term cash flow needs. Receivables from the sale of goods and services are purchased by abcfinance for up to 90 cents on the euro. Here, too, our nationwide network of offices means we are never far from our clients.

 

Thanks to its full-coverage nationwide network, clients always have a branch office nearby.

Acquisitions open up new sectors and intensify growth

The abcfinance division provides alternative financing solutions for small and mid-sized companies with its products Leasing, Factoring, and Solutions (industry solutions). It refinances through external banks and using deposits from private and institutional investors in its own bank. The offers are targeted primarily at companies with sales volumes of € 1 to 20 million. Among the leasing companies not affiliated to manufacturers and banks, abcfinance is one of the leading financing partners in moveable-goods leasing. In addition to the product range for the Leasing segment, the Solutions segment develops industry-specific sales financing solutions for

retailers and manufacturers. With more than 30 000 commitments, primarily in Germany, but also in Austria and Switzerland, the abcfinance division covers a wide industry spectrum in moveable-goods leasing. Equally diverse are the financed assets, such as vehicles, machinery, equipment, telecommunications and IT or fitness equipment. The Factoring segment, which acquires receivables against immediate payment of a purchase price, serves clients in many industries, and offers early liquidity, as well as protection against bad debts. Within the Factoring segment, the abcfinance division is one of the market leaders among mid-sized companies.

 

The economic crisis of recent years has had a disproportionate effect on the leasing and factoring business. Following two years of declining new business, the trend began to reverse in 2010. The upturn and the strong growth of the German economy led to an increase of 9 % in capital investment, considered to be a key indicator in the moveable-goods leasing segment. On average, new leasing business throughout the year increased by approximately 3 % according to data from the German Association of Leasing Companies (BDL). In 2010, the Factoring segment experienced dynamic growth and a marked rise in new customers. During the economic crisis, factoring was viewed by small and mid-sized companies as an alternative to conventional bank credit. Growth-inhibiting factors in the leasing business included the increased internal financing by many companies using their own funds, a decline in private leasing due to the car scrappage scheme, and the increased allocation of sufficient credit by banks to companies. It is open how the changes to the international accounting standard will affect the leasing behavior of customers who, for the most part, use accounting systems in line with German commercial law.

 

The introduction of supervision for leasing companies by the German Federal Financial Supervisory Authority (BaFin) placed organizational and financial burdens on the leasing companies. Moreover, the lack of refinancing options has also burdened the leasing and factoring sector. Smaller leasing companies were only able to refinance with a high margin load or not at all. This encourages the consolidation of the industry.

 

At € 414 million, net sales for the abcfinance division were around 17 % higher than those of the previous year and above the trend for the industry. The Leasing segment was again able to increase its new business by 15 % to € 394 million, significantly exceeding the industry average for growth. The factoring segment recorded a 37 % improvement in new business compared with the previous year in the amount of € 433 million. The financial results – as defined by BDL – could be significantly greater in comparison with the previous year. The pleasing development resulted in both lower risk costs and increasing new business with falling unit costs. Discontinuation of the diminishing provision method due to the German Accounting Law Modernization Act (BilMoG) had a positive impact, as new additions from this reporting year will be depreciated in a linear manner.

 

Begun in 2009, the acceptance of private customer deposits via the Internet to an in-house bank has developed very positively. Along with deposits from institutional customers, this has become the division’s largest source of refinancing.

 

The provision for risks moved to a high, albeit declining level. To manage the risks in moveable-goods leasing and factoring, the division uses a comprehensive risk management system which differentiates between the risk fields address nonpayment, liquidity risk, market price risk as well as operational risks in accordance with the Minimum requirements to riskmanagement (MaRisk) of the BaFin. There is also an early warning system, which provides a systematic early warning for critical developments. In addition, the broad distribution of the commitments limits the risk potential to individual cases. No commitment is greater than 0.3 % of the stock.

 

In September 2010, the abcfinance division expanded its internal growth strategy by taking over the active business of PCL Pro Consult Leasing AG. As a leasing provider, the company from Steinbach (Taunus) has been providing individual financing solutions for small and mid-sized companies on the German market for 20 years. It is particularly well-established in Hesse, Thuringia, and Saxony. Consequently, the sales network is stronger in these regions.

 

In 2011, abcfinance plans to further increase its sales and earnings. This is based on a continued favorable economic environment, the impact of acquisitions and future purchases. The acquisition of DV Systems GmbH, completed at the turn of the year, will have a positive effect in 2011. The company, based in Mannheim, specializes in IT and will provide abcfinance with sound introduction to the IT leasing field and its expansion. On February 1, 2011, the sales activities of FCS Financial & Consulting Services GmbH were also taken over. Further acquisitions over the course of the coming year should strengthen the division’s commitment in already existing segments.