The Australian financier behind the now collapsed finance group Greensill Capital pitched his business as an agent of “technological disruption” that aimed at “democratising capital”. But what Lex Greensill was actually offering was a new spin on a form of financing that dates back at least 4,000 years to Bronze Age Mesopotamia.
The trading of invoices by intermediaries helped finance medieval European commerce, the expansion of the British empire and the 20th century US textile industry. Now a modern incarnation — in the form of supply-chain finance — is attracting a good deal of scrutiny following the failure of Greensill in March.
For centuries, financial middlemen — typically banks — lent money to suppliers of goods who did not expect to be paid by their customers for several weeks, until the end products were sold on the open market.