Factoring
Key Figures & Trends
Erik Timmermans, rep. Secretary General IFG
G-Nexid Workshop, Geneva 28 March 2014
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What is Factoring / Commercial Finance?
• General definition: A range of working capital solutions designed to provide
day to day operating business finance for commercial organisations
• Basic definition: Provides cash against customer invoices
• Descriptive definition: Factoring may include:
 Sales Ledger Administration
 Collection
 Credit Insurance
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Why is this industry important?
• Support for (in particular SME) business
to develop and grow
• Support for export development
• Creating and supporting employment
• Efficient economic growth
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Average Client Turnover, Europe
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Evolution of World Factoring Turnover
1980 : +/- 50 billion €
1990 : +/- 200 billion €
2000 : +/- 600 billion €
2012 : +/- 2.120 billion €
The industry has grown 4
over the last 30 years…
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times faster than the World economy
Factoring in the World 2012
Europe
North America
1.257 (59%)
91 (4%)
(1.173 EU)
South
America
Total World: €2.119 billion (+8%) 93 (4%)
Source: IFG GIAR 2012
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Asia
581 (28%)
Africa &
Middle East
32 (2%)
Australia &
NZ
64 (3%)
Key Industry Figures
• Turnover 2012 : 2.119 billion €
• + 8 % compared to 2011
• Approximately 2.700 factoring companies
But 1.200 in USA and over 500 in Brazil…
• Financed amount at year end : 309 billion €
• Factoring Clients : 496.000
• Factoring Debtors : 13.500.000 (rough estimate)
• Employees : 46.000
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Market Shares 2012 (GIAR IFG)
China
UK and Ireland
France
Italy
Germany
Spain
Japan
USA
Taiwan
Australia
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Total in Mio €
Market Share
343.759
311.156
186.494
181.878
157.424
124.036
98.100
80.000
70.000
63.291
16,2 %
14,7 %
8,8 %
8.6 %
7,4 %
5,9 %
4,6 %
3,8 %
3,3 %
3,0 %
Market Structure
Concentration :
Bank dominated:
Combined market share of 5 biggest
factoring companies in each country
• On average 84%
Combined market share of Top 5
in each country
49 % : bank subsidiaries
44 % : bank divisions
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International Factoring
Support of SME’s in open account trade
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International Factoring
•
•
•
•
62% of World Factoring turnover
is reported as Domestic Factoring
Cross-border factoring continues to grow
more rapidly than domestic factoring
Either Direct Export Factoring
(Factoring Company deals itself with foreign buyers)
Or Two-Factor system
(Export Factor uses services of Import Factor in buyer’s country)
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The Two-Factor System
Export
Factor
IF exchange:
Electronic exchange between factors
Credit protection & Collection by Import Factor
Factoring agreement:
Prepayment of invoices/
credit management
Supplier
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Import
Factor
Invoice collection
and debtor
credit approvals
Delivery of
goods & services
Debtor
Benefits of the two-factor system for the Exporter
100% protection against the buyer’s
inability to pay on 90 days past due.
Increased sales in foreign markets by
offering competitive terms and conditions
of payment.
Credit lines are in place for buyers, which
speed up response time for orders and reorders.
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Accelerated cash flow through faster
collections.
Elimination of time-consuming
administrative burden or delays linked
with the negotiation of Letters of Credit.
Benefits to the Buyer
Purchase on convenient “Open Account”
terms.
Expanded purchasing power without
using existing credit lines.
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Orders can be placed swiftly without
incurring the delays, complications and
cost of opening Letters of Credit.
No additional commission for buyers.
Role of IFG
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IFG
• Started in 1963
• Members in more than 60 countries
• Representing the Commercial Finance Industry worldwide
(Factoring, Invoice Finance, Asset Based Lending)
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Connect
• Creating Business Opportunities for Members through TwoFactor platform and other cross-border business solutions.
• Global association but regional approach through Chapters
(Asia, Latin America, Africa, Central East Europe)
• Partnering with like-minded associations (CFA USA, ADFIAP,
national associations…) and international organizations
(EBRD, EIF, CFEC, …)
• Connect members with specialized service providers (IT,
Legal, Risk, Consulting…)
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Educate
• Developing Talent in Factoring Industry
• E-learning in different languages
• University certificated Course on Finance International Trade
& Commercial Finance
• Leadership Business game
• Mentoring and Consulting
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Influence
• Research and Statistics Center
• Access to networking & Learning
• Defending the industry with policy makers :
• EU Federation for Factoring & Commercial Finance
• Co-operation with CFA for harmonization
• Draft Model Law on Factoring
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Thank you for your
attention!
Questions?
More info on www.ifgroup.com
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