Factoring. Key Figures & Trends. Erik Timmermans, rep. Secretary General IFG G-Nexid Workshop, Geneva 28 March 2014 CONNECT. EDUCATE. INFLUENCE.

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2 Factoring Key Figures & Trends Erik Timmermans, rep. Secretary General IFG G-Nexid Workshop, Geneva 28 March 2014

3 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

4 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

5 Average Client Turnover, Europe

6 Evolution of World Factoring Turnover 1980 : +/- 50 billion 1990 : +/- 200 billion 2000 : +/- 600 billion 2012 : +/ billion The industry has grown 4 times faster than the World economy over the last 30 years

7 Factoring in the World 2012 Total World: billion (+8%) Source: IFG GIAR 2012 North America 91 (4%) South America 93 (4%) Europe (59%) (1.173 EU) Africa & Middle East 32 (2%) Asia 581 (28%) Australia & NZ 64 (3%)

8 Key Industry Figures Turnover 2012 : billion + 8 % compared to 2011 Approximately factoring companies But in USA and over 500 in Brazil Financed amount at year end : 309 billion Factoring Clients : Factoring Debtors : (rough estimate) Employees :

9 Market Shares 2012 (GIAR IFG) Total in Mio Market Share China ,2 % UK and Ireland ,7 % France ,8 % Italy % Germany ,4 % Spain ,9 % Japan ,6 % USA ,8 % Taiwan ,3 % Australia ,0 %

10 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

11 International Factoring Support of SME s in open account trade

12 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)

13 The Two-Factor System Export Factor IF exchange: Electronic exchange between factors Credit protection & Collection by Import Factor Import Factor Factoring agreement: Prepayment of invoices/ credit management Invoice collection and debtor credit approvals Supplier Delivery of goods & services Debtor

14 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. Accelerated cash flow through faster collections. Elimination of time-consuming administrative burden or delays linked with the negotiation of Letters of Credit.

15 Benefits to the Buyer Purchase on convenient Open Account terms. Expanded purchasing power without using existing credit lines. Orders can be placed swiftly without incurring the delays, complications and cost of opening Letters of Credit. No additional commission for buyers.

16 Role of IFG

17 IFG Started in 1963 Members in more than 60 countries Representing the Commercial Finance Industry worldwide (Factoring, Invoice Finance, Asset Based Lending)

18 Connect Creating Business Opportunities for Members through Two- Factor 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 )

19 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

20 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

21 Thank you for your attention! Questions? More info on