Factoring market exceeded 8.6 billion euros in 2023. Reported growth is over 10% compared to 2022

The factoring market experienced moderate growth in 2023, reaching a level of 8.66 billion euros. According to the annual market study conducted by the Romanian Factoring Association (ARF), the growth compared to 2022 was 10.35%. Domestic factoring recorded a growth of 12.5%, exceeding 7.6 billion euros. In this market segment, the most spectacular evolution was recorded by reverse factoring, reaching 3.37 billion euros, an increase of 30% compared to the previous year.

An aspect worth highlighting is the surpassing, for the first time in the history of the market study conducted by ARF, of the threshold of 2% of the total relevant volumes for the domestic market, regarding the operations carried out by Non-Banking Financial Institutions, reaching a level of 5% in 2023.

International transactions carried out through export and import factoring contribute 12.5% to the total market, with a total export operations figure of 882 million euros, down 3% from the previous year, while imports reached 136 million euros, down 8.7%.

“If we refer strictly to companies that accessed domestic factoring solutions, the most active continued to be those in the Fast Moving Consumer Goods (FMCG) sector (18.5% of total relevant receivables, up 15% from 2022), alongside IT&C, Automotive, and Other Activities (13% of total relevant receivables, up 15.5%, 16%, and 28% respectively compared to 2022). Due to the high concentration in this segment regarding export transactions (56% of total relevant receivables), the sector with the highest share in the entire market remains Metals, Chemicals, Recycling (14.5% of total factored receivables, down 10% from 2022 in absolute sum),” explains Bogdan Roșu, ARF President.

Consistent increases were also noted in the area of companies in the sectors generically named Agriculture, Fishing, and Food Products (21.5%), Vehicles, Machinery, and Equipment (16.5%), and FMCG (15%).

The top domains in which companies accessing domestic factoring financing in 2023 are classified:

1. FMCG – fast-moving consumer goods: 1.4 billion euros
2. Vehicles, machinery, equipment: 1 billion euros
3. Electronics, information, and telecommunications: 980 million euros
4. Forestry, wood processing, construction: 729 million euros
5. Metals, chemicals, water, recycling: 681 million euros
6. Energy: 681 million euros
7. Agriculture, fishing, food products: 597 million euros
8. Transportation and storage: 315 million euros
9. Pharmaceuticals, health, and social assistance: 229 million euros
10. Other activities: 1 billion euros

The ARF study also analyzes the value contribution of development regions to the total factoring market. “In absolute figures, the Bucharest-Ilfov area generated the most significant factoring transactions – approximately 4.2 billion euros – up 19% from the previous year. Moreover, Bucharest-Ilfov also encompasses 24% of the total companies conducting factoring operations this year. The South-East region ranks second, with a value of 895 million euros, and the South-Muntenia region ranks third, with 887 million euros. Significant percentage increases were recorded in the Center and West regions by 28% and 25% respectively, and in the North-East region by 67%,” further specifies Bogdan Roșu.

In terms of the turnover of companies accessing factoring financing, there is a slight increase in the shares of companies accessing factoring with a turnover of over 50 million euros (44%, up from 41%), to the detriment of companies with a turnover of less than 5 million euros (22%, down from 24%), and the middle segment (34%, down from 35%).

“As we estimated at the beginning of last year, investments, largely based on the opportunities offered by the PNRR program, supported economic growth, surpassing consumption, negatively impacted by the effects of inflation. Still at a very high level, the estimates of reducing the latter remain reserved for 2024, with a direct effect on the reference interest rate, a aspect also supported by the most recent statements of the National Bank Governor. Despite the very large budget deficit and certain payment blockages that occurred already at the end of last year, 2024 being an electoral year, we do not expect an increase in taxation. At the same time, we closely monitor the evolution of the major European economies, with which Romania has strong interconnectivity, and the effects of the pressure exerted on them by the current geopolitical situation, as well as the developments and effects of conflicts in Ukraine and the Middle East, which can affect international trade, both in terms of the evolution of the prices of the main resources and their availability, as well as the effects suffered on international production and distribution chains. In this context, we consider that 2024 will be a year of moderate growth for the factoring market in Romania, a year of ‘preparation’ for a potentially very different 2025, in which the increase in taxation will no longer be avoidable, its impact still being difficult to estimate,” further explains Bogdan Roșu.