The Romanian factoring market grew by 12% during the first six months of this year as compared to the same period of 2016, to reach Eur 2 billion, according to the data collected by the Romanian Factoring Association (ARF). “The growth is not an important one as a whole, but the figures could have been even 5 or 6 percentage points higher, had the economy also benefited from a high level of investments instead of consumption only. Capital expenditure (direct state investments) is still at a minimum. Insufficient funds are still allotted for strategic infrastructure or energy projects, while the EU fund absorption is very low. All these facts will have a major impact on the economic growth over the years to follow”, states Bogdan Roșu, ARF Chairman.
Taken as a whole, domestic factoring operations went up by more than 14%. In terms of the products accessed, reverse factoring accounts for the most significant percentual growth (58%), which helped maintain domestic factoring on a leading position, with no regression, and a volume of more than Eur 1.25 billion. Reverse factoring has enjoyed an increasing level of interest over the past years, especially on the segment of very large companies. “The typical candidate for a reverse factoring product may be a key account who has the initiative of financing its suppliers (on the domestic or external market) by factoring. Thus, they will collect their invoices prior to the due dates, through a system made available by the client, in collaboration with the financing institution (bank or NBFI). The problem of the lengthy payment terms is thus taken over by the financing institution, and the commercial relation takes place under ideal conditions”, explains Bogdan Roșu.
In terms of volumes of factored accounts receivable, FMCG ranks first, with a 40% growth, closely followed by the IT sector, with a growth of 168%, while constructions ranks third, with a growth of 10%, as compared to the first six months of 2016.
168% increase of domestic factoring in the IT sector
“In terms of domestic factoring, IT&C had the best evolution as compared to 2016, up from Eur 106 million to almost Eur 290 million. It currently approaches the volumes achieved by FMCG companies, and at this growth pace, we expect it to actually rank first rather shortly”, further states Bogdan Roșu.
Export factoring grew by 3.5% on the whole, while import factoring is up by more than 12%.
“This growth is also explained by the totally unexpected expansion of consumption, in the context of the higher population revenues, especially of public sector employees, over the past year. The consumption demand could not be covered by the domestic production capacities, which are insufficiently developed and not flexible enough to adapt to such an evolution. Hence, the deficit had to be covered by imports, as the import/export unbalance negatively impacted the GDP”, states Bogdan Roșu.
More than half of the volumes managed via export factoring (with a share of 56%) were accessed by companies in the “Metals, chemicals, water and recycling” sector. In fact, this sector also is the leader for import factoring (with a share of 44%).
In so far as the import factoring is concerned, IT&C ranks second (with a share of 22%), while FMCG ranks third (with a share of 21%).
In absolute figures, there is growth in all the three types of factoring operations. Internal factoring reached Eur 1.58 billion, export factoring exceeded Eur 350 million, while import factory went above Eur 70 million.
“It could be stated that, through constant promotion, ARF managed to achieve its main goals for the first half of the year, especially since there is an increase in both the managed accounts receivable volume (12%), and in the number of companies who accessed factoring products (by approximately 15%). Moreover, the SME factoring volumes grew by 5%, while the assigned debtor’s payment discipline improved, with an average payment delay decrease of approximately 18%”, further stated the ARF Chairman.