Factoring exceeded the Eur 4.56 billion threshold in 2017

The factoring market registered a new record growth last year, as compared to 2016, exceeding Eur 4.56 billion, according to the yearly survey carried out by the Romanian Factoring Association (ARF). The general growth, for all factoring-financed categories, was of 13%, with a previous year’s advance of 10%. “Large companies with turnovers above Eur 50 million are the largest contributors to the factoring operations, while the contribution of small enterprises reached 25%. The figures obtained are encouraging for all the players on the market, considering that this is the third consecutive growth year”, states Bogdan Roșu, ARF Chairman.

The domestic factoring went up from Eur 3.2 billion in 2016 to Eur 3.6 million in 2017. “If in 2016 the advance of the domestic factoring volumes was of Eur 300 billion, last year we managed to obtain an even more important growth, of Eur 400 million. Reverse factoring held the stage this year as well, with a 44% advance as compared to 2016. Moreover, it also reached a record level of almost Eur 1.2 billion. The most surprising growth in the light of the advances registered in the previous years belonged to the export factoring: 20.5% (as compared to a yearly average of 11% over the past 5 years), reaching a level of Eur 777 million. This growth actually exceeds that of the exports of Romania, which is of 9.4%, and it was mostly due to the FMCG and Metal sectors.”, explains Bogdan Roșu.

With respect to the fields that mostly resorted to the internal factoring, as a premier, FMCG (53% growth as compared to 2016) and IT&C (36% growth as compared to 2016) surpassed the construction sector. The positive evolution of FMCG draws, of course, on the constant increase of the consumption levels, both in the food and in the non-food sector, the internal factoring financing operations reaching almost Eur 880. On the whole, also considering the export and import operations, FMCG exceeded Eur 1 billion. The IT&C and Metal sectors continue to grow and expand, with the strong support offered by factoring, while the construction field registered a decline for the first time in 4 years, with the investments in infrastructure projects dropping to a new minimum, after their constant decrease starting 2012”, says Bogdan Roșu.

Factoring products reached even more companies, the overall number of customers who carried out factoring operations in 2017 being 16% higher as compared to 2016. Relying on the technological advances, the factoring industry has also managed to enhance its efficiency, the increase in the number of customers being accommodated by a number of employees involved in the product development and management that is but 13% higher.

Factoring continues to be an accessible financing option for SMEs

“According to a recent survey carried out by NBR*, on the Romanian companies’ access to financing, the greatest challenges faced by SMEs include competition, the payment discipline in the business environment and the access to financing. The very strong competition forces small companies to offer extended payment terms to their customers, which they sometimes are unable to handle. Beyond these contractual terms, the faulty payment behavior can cause significant bottlenecks and actually endanger the very operation of the company. Moreover, traditional financing products mainly rely on material securities and involve a complex and lengthy approval process. Under the circumstances, the factoring solutions are the easiest to access and use, due to the structure of the initial approval process and to the actual deployment of the operations. Moreover, they specifically address commercial contracts with payments on due dates, thus generating positive effects in that they bring the actual payment date as close as possible to the contractual one. Hence, all three concerns uttered by contractors find their solution in the factoring product.

“At the same time, considering the high liquidity pressures, cash-flow optimization will most certainly continue to be one of the most acute challenges faced by company managements in 2018 as well. The countless legislative and tax changes add to all that, with an immediate impact on the ROBOR interest rate, the SMEs being forced to cope with an increasingly strenuous business environment, where the financing cost increase could become an actual problem. Fortunately, the options available in terms of financing are expanding, and this actually is the trend of the market we represent, which generates viable cashflow balancing that, we hope, will be of greater interest than classical solutions, to which the SMEs currently are somewhat reluctant”, states Bogdan Roșu.

The information related to the assessment of the 2017 factoring market was supplied by the members of ARF – Access Financial Services IFN, Banca Comercială Română S.A., BRD – Groupe Societe Generale S.A., Banca Transilvania S.A., EximBank, IFN Next Capital Finance S.A., ING Bank Romania S.A., Patria Bank, Piraeus Bank Romania S.A., Raiffeisen Bank S.A., Unicredit Bank S.A. It also includes data offered by non-members and an estimate for the other players which could not take part in the study.
*”2017 survey on the access of non-financial Romanian companies to financing”