When asked, “Is technology empowering or overshadowing expertise in asset-based lending?” the answer is simple: Yes.

We’re in an era where technology’s efficiency and human expertise should work together, and if balanced thoughtfully, we can absolutely have both. But this requires intention. As we lean into technology, we must preserve the critical thinking that defines the art of ABL.

Over the past few years, technological advancements in factoring and ABL have quickly evolved. What started as small, incremental changes - like exporting data files to send notification letters, automating cash posting, reconciling borrowing base certificates - has now become AI-enhanced workflows, enterprise resource planning (ERP) integrations with borrowers’ accounting systems, predictive analytics, and tools designed to streamline decision-making.

These tools do more than crunch numbers. They bring narratives to light, uncovering risks, opportunities, and relationships beneath the surface. Today’s optical character recognition (OCR) systems, for example, are no longer just about digitization. They interpret, analyze, and take action. By enabling specialty finance companies to handle larger portfolios and save time, technology opens up space for more meaningful work.

Yet, while technology facilitates us to do more and do it faster, it also raises questions. Are we preserving the judgment and expertise that make ABL unique? Are we ensuring that automation enhances, rather than diminishes, our critical thinking?

The balance between technology and expertise must be intentional, and like any advancement, there are challenges to navigate.

Efficiency vs. Expertise: The Balancing Act

For seasoned professionals, technology has become a lifeline for efficiency. Automation now handles routine tasks like compiling borrowing bases, reconciling aging reports, and tracking workflows. It also incorporates fraud-detection protocols and creates and tracks underwriting checklists to ensure every step is followed.

But, it’s not only about the numbers; it’s about understanding the dynamics they represent. Numbers tell a story: how cash flow impacts operations, how borrower relationships evolve, how the collateral performs, and where risks might reside or be hidden underneath. This narrative is critical, and it’s where human expertise truly excels.

I’ve seen scenarios where everything on paper looks perfect. A system-generated verification report might show consistent numbers, but a deeper dive by a seasoned professional reveals discrepancies. For example, invoice notes pass an automated test, yet manual scrutiny uncovers fake VOIP-generated phone numbers.

In another instance, AI was mapping financial reports, but pulling incorrect columns due to formatting changes. The result? Inflated figures that only a trained eye could flag as “not making sense.”

This is why we need intentional “stop and think” or “checkpoint” moments built into workflows. These checkpoints allow professionals to ask:

• Does this make sense?
• Are we missing anything?
• Where could something break down?

By incorporating these intentional reviews, we validate the tools’ results while ensuring accuracy and integrity.

Dependency Risks: Losing the Foundations

One of my biggest concerns is the potential loss of foundational skills in the next generation of factoring and ABL professionals. If new team members rely entirely on tools to “do the math,” how will they learn to think critically? How will they understand the layers of lending, such as the nuances of progress or milestone or other types of niche billing, lienable payables or payroll tax liabilities or liens, union obligations, or other risk elements?

It’s like learning to solve equations without understanding the formulas. You might get the right answer, but you won’t know why. And in ABL, the “why” often reveals hidden risks.

To address this, companies need structured training programs that teach both technical and foundational skills. Some groups incorporate rotational programs exposing team members to various roles, deep-dive sessions into manual processes, and case studies highlighting nuanced decision-making that can ensure expertise evolves with technology.

Mentorship programs for knowledge as well as using hybrid tool workflows, where tools flag potential risks but require human validation, are also being used effectively. These approaches preserve judgment while embracing efficiency.

What Are Companies Doing?

Many firms are adopting creative strategies to ensure expertise isn’t overshadowed. Some implement onboarding rotations where new hires explore multiple departments to see how everything works together. Others revisit this rotation after several months to solidify the connections between the various departments and roles.

Human-guided AI is another growing trend, where automated systems flag anomalies, but rely on human oversight to validate decisions. This ensures technology acts as a partner, not a replacement.

At Haversine, we’ve taken a similar approach. Any tech development involves team collaboration, ensuring insights from multiple perspectives. We document processes, implement checks, and work to foster a learning environment.

For us, technology isn’t the solution; it’s part of the solution. It’s a tool within the process, enhancing what we do, but not replacing the expertise we bring to the table.

The Challenges of Implementation

Let’s be honest: implementing technology is rarely as easy as it sounds. It seems to sound super simple when you first start the project. Know that the path forward will be choppy and plan for that.

For example, at Haversine, we’re working on a tool to consolidate aging reports across multiple factoring and ABL firms. It sounds simple, but integrating varied factoring and loan systems, mapping inconsistent data and data types, and building workflows takes time and focus.

These projects are worth it, but they’re resource-intensive. And without clear communication and alignment across teams, even the best ideas can falter and get off course.

The key is prioritizing tech initiatives, allocating resources effectively, and measuring success. Leadership, IT teams, and end-users must be on the same page to ensure these tools deliver value without becoming burdens.

User Buy-In: The Human Element

Getting buy-in for new tools isn’t just about showcasing their benefits. It’s about addressing fears and frustrations, like the misconception that efficiency eliminates jobs. In reality, efficiency shifts focus. It creates space for meaningful work, new skills, and opportunities to add value in ways tools can’t replicate.

Transparency is critical. Explain why changes are happening, how they help the company, and what they mean for individuals. Provide training, clear processes, and opportunities for growth.

If tools handle the math, professionals can focus on what matters most: piecing together the broader narrative of risks, opportunities, and trends.

Training for Critical Thinking

Training remains one of the most impactful ways to preserve expertise. Encourage team discussions, cross-collaboration, and critical thinking exercises. Real-world scenarios, like analyzing historical deals or simulating audits, help bridge the gap between technical proficiency and nuanced judgment.

When I was starting out, sitting in on deal discussions was invaluable. It wasn’t just about taking notes for the meetings; it was about learning to connect the dots and understand the “why” behind decisions.

Creating these opportunities for the next generation is essential. Lunch-and-learns, case studies, and collaborative reviews can help new professionals develop a well-rounded perspective. Help them join the conversation.

The Future of ABL: Technology as a Partner

Will technology replace certain aspects of ABL expertise? Probably. Routine tasks and workflows are ripe for automation. But can it replace the ability to see beyond the data, anticipate risks, and build relationships? No. At least, not yet. That’s where the art of factoring and ABL remains human. It’s still an artform that is learned over time, with experience that includes challenges, mistakes, and losses along the way.

When talking about technology though, the tools that excite me most are those that save time while preserving critical thinking, tools that streamline processes without losing judgment.

To me, the intersection of technology and expertise isn’t an either-or scenario; it’s a partnership. Technology empowers us to do more, faster. But it’s our expertise that ensures we’re doing the right things and in the right way.

The challenge, and the opportunity, is to embrace the tools while preserving the skills. To let technology handle the routine so we can focus on the strategic. Because, at the end of the day, factoring and ABL aren’t just about the numbers in the math problem. They’re about telling the story behind the numbers.