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Worldwide factoring report We
asked our friends in International Factors Group to let us have
their thoughts on progress made through 2007 and the prospects Belgium Eurofactor Belgium Eurofactor Benelux is based in Brussels and is one of the fastest growing factoring companies in Belgium. Since 2000 it has multiplied its turnover six-fold and has become a respected player, ranked fourth in the Belgian market. As an integrated member in the Eurofactor group, it focuses first of all on cross-border services and multi-national contracts. As a result, Eurofactor Benelux has become a specialised company using high-tech and tailor-made financial solutions for its very often big and important clients. Secondly as a result of being part of the Eurofactor group, the focus is on the import and export business benefiting from a renewed two factor system. A good IT and cash pooling system have pushed away the classic disadvantages of the use of local agents. The Belgian market is characterised as being at the crossroads of the Latin and Anglo-Saxon receivables financing culture with a mix of recourse and non-recourse contracts. On the other hand there is a very important dominance of banks and bank factors. Although small and medium-sized companies and standard factoring will remain part of the portfolio, market growth during the next years will be entirely realised with specialised products such as invoice discounting, asset-based lending, supplier financing and flexible multi-domestic solutions for international companies including European Pass. Therefore strategic partnerships with international financial institutions, credit insurers and international brokers are very important.
Peter Hendrick Chile First Factors SA Chile The Chilean economy has been growing for the past two years at a rate of 5.3% and 4.4% respectively, which, if compared to the historically high prices reached by major exportable commodities, represents modest figures for the years in question. The unemployment rate was 6.7% at the end of 2006. High commodity prices and a strong internal demand have been the main drivers for the Chilean economy for the last three years. The factoring industry, as in past years, has shown a steady growth with a net increase in turnover of almost 27% during 2006, accounting for more than $9.2m with invoices being the most assigned document (56%) followed by post-dated checks (7.5%). International factoring represented 3.5% of the total business in the same period. 95% of the factoring business is recourse factoring. There are two key aspects that explain the rapid spread of factoring services; the first is the new law regulating the assignment of receivables and the enforcement of collection on past due invoices, and the second is that all major banks have entered the factoring business, with a consequential reduction in costs and increase of usage. First Factors SA, which has very experienced and committed staff, offers a wide variety of working capital solutions from domestic factoring to leasing and inventory finance, targeting its products at small and medium-sized companies. In order to increase its service portfolio, First Factors SA joined International Factors Group (IFG) in January 2007 and set up a powerful and skilled team to offer tailor-made financial solutions for exporters and importers with specific needs that big banking corporations find it hard to meet.
In
terms of volume, First Factors SA will account for over $24m in
turnover during 2007 with 85% growth expected in the
Fernando Gonzalez del Riego China Teanda (Tianjin) International Factors Co. Ltd The rapid development of the Chinese economy and the increase in its import and export trade has attracted the attention and input of financial institutions and trade service domains from many countries. They have been taking possession of the Chinese market and developing it in many ways to increase profits. The Chinese factoring market is slowly being directly developed by domestic and foreign factors. Although the two big groups of factors, IFG and FCI, have held joint publicity and promotional activities for their members in China, there has been little real impact. This highlights the problem of how to open up and rapidly develop the Chinese market. This needs consideration. Currently, the factoring business is still a financial product of the Chinese banks. During the factoring process, they still adopt the traditional loan and credit operation procedures determined by the banks’ strict operating procedures. Businesses are therefore reluctant to use factoring services, and so the costs of import and export trade remain high and there is a low international factoring portfolio. The development of Chinese factoring needs to adapt to the local situation in China. Meanwhile, active participation, joint innovation and expansion of the current range of services and functions of international factoring are necessary to develop this relatively small industry in China into a big market. “Innovation is the pivot and once we have a suitable pivot, we can move up the earth by a pinch bar.” It is usual for factors from many countries to focus on the customer, and the base point is customer demand when they set-up an international factoring service and market it. But here in China, we haven’t tended to work on what the customer really wants. Customers seek competitive deals, and not only where price of products, quality and after-service are concerned. The competition has turned to the chain of trade and the chain of supply. The modern division of labour has become more and more detailed. During the process of production, not only the materials need procurement, but also various components. If you want to sell the products, an order is necessary. Factors should enlarge the trade financing business to the whole supply chain. It can truly achieve the tenet: to be focused on the customer. This new focus will change simple “international settlement” of international factoring into “chain factoring of trade” and will expand the functions of international factoring into a real financial service industry that enterprises can rely on.
In
the “trade chain”, enterprise customers need to make both purchases
and orders. We call an order “heaven” and call management “earth”.
An order is the existing root for enterprises. In the import and
export trade, the importer needs not make the purchase. It is the
exporter who needs an order. If factoring business go deep on one
item of trade chain, it has finished “the function of trade chain
factoring”. Business customers will transact factoring business
spontaneously and this will turn the factoring business into an
essential partner for a company wishing to develop. This operating
mode can make the international factoring business develop well If we take China’s export factoring as an illustration: Factors normally have their own customers and access to their customers’ credit information. They can send us their customers’ import purchase information. Then we will arrange with the China Import & Export Industry Association and China Chamber of Commerce of Import & Export to contact buyers who will negotiate with Chinese exporters directly, facilitating direct talks between importers and exporters on an international factoring platform. The platform was built by Chinese and foreign factors and is beneficial to develop and solidify customers of each other. The total value of imports into China in 2006 was $1,760bn dollars, including export value $969bn dollars and import value $791.6bn dollars. China is in the top three in the import and export trade and has become the major trading country in the world. There is a lot of space for the development of international factoring in this market. The key point is how well foreign factors can adjust their strategy in order to jointly develop China’s factoring market. Just like Ted C. Fishman, an American writer, said in China, Inc: “The world shrinks as China grows”, meaning that a flourishing China can only be beneficial for everyone. About this senior manager: Peiming Pi was born in 1950 in Tianjin, China. He graduated as a nuclear physics major from Peking University and after graduation, he taught at the university. He then joined the General Staff Military College of the Chinese People’s Liberation Army, where he acted as the commissioner of a research department as a senior engineer with the rank of a military captain. He has a links with many government departments. He was transferred to engage in financial work and acted as president of Tianjin Branch of China Communication Bank in 1996. He was invited to be the main advisor on the mainland of China by the Hong family of Singapore. Subsequently, he was vice president of the Dongfang mining company and while there, was responsible for investment work. After that he was invited to be the vice president of a factoring enterprise using foreign investment and first suggested the use of “sparkplug” innovative ideas, including: “industry factoring organiser” and “reverse enlargement of business” and his ideas were well-received by international colleagues. He is adept at combining the social and scientific domains with natural scientific thought and advocates Einstein’s words: “Imagination is more important than knowledge”, which is regarded as the foundation for innovation. Currently, he is president and director of Teanda (Tianjin) International Factors Co Ltd. The functional expansion of international factoring and the enhancement of the market share of China There are seven ways for international settlements: remittance, collection, letter of credit, standby letter of credit, a letter of guarantee, international factoring, and forfaiting. The international factoring business began in Britain in the 18th century and in the 1950s it was developed progressively in the United States and across western Europe. However, its development in China has been relatively slow. The main reason is that China is a latecomer to factoring and its benefits are still not fully understood. Chinese import and export companies are not familiar with factoring because of the impact of other traditional international settlements. We have been accustomed to collection, letter of credit and other settlements and change will take some time. Secondly, if companies in China want to obtain an overseas order, they must rely on many middlemen at home and abroad. This means that 10%-15% of the profits will be swallowed up by these middlemen, which makes the factoring business very expensive because it will increase export costs. Thirdly, the relative factoring laws are out of date. The fourth is the lack of “homegrown” factoring talent. The author believes that the factoring rate is actually higher than both letter of credit and collection (letter of credit 0.125%, collection 0.1%, factoring 1-2%), but the rate does not necessarily demonstrate which settlement is better. Factoring is not a substitute for a letter of credit or other settlements. So it is hard to say which is better. However, they are applicable for their own operation range according to their own characteristics. For example, as an exporter, if you have marketable products and your customers or potential clients are willing to give you a letter of credit, you can continue to do your business by a letter of credit. But, today in a buyer’s market, you will find that more and more customers prefer not to purchase by letters of credit. They do not want to finance your sales and assume the additional work or expenses. If you want to enlarge your sales to foreign markets, it is necessary to provide importers with conditions beneficial to them. It means O/A or at least D/A. Then you will need factoring to provide you with a risk guarantee or financing. The international factoring business has an initial base in China, but it needs a fostering process for the long-term. In order to improve the brand of international factoring, the market share in China needs to be expanded and more and better customers sought. We must shake off inherent thinking inertia, and must study as well as discuss from different points of view, in multilevel ways and on many layers, the demands of import and export companies. We should seek international factoring customers, adapt products to suit customers and expand the functions of international factoring in order to enhance the market share in China. What exporters need is the market. In detail it means orders from buyers with good credit standing. Referring to international trade procedures, firstly an exporter needs to find an appropriate buyer and then sign an order—negotiate about which settlement will be used (L/C, T/T, D/A, O/A) —production—logistics (purchase of materials, shipment). The process cannot be initiated without an order. Banks participate in financing and settlement and focus on this. In addition, in the import and export business, producers are always dominated by middlemen, and almost 10%-15% of profits of exporters and terminal importers go to them. To find an end-buyer is the goal for a company. If factors assist an enterprise in the order process and find an appropriate buyer for helping him get the order, it will not only develop the market, but also it will reduce the marketing costs. Once enterprises are interested in cooperating with factors, potential customers will come. Factors will reduce the costs of developing new customers and will attain the goal of enlarging the market share more quickly. It is hard for a company to find an appropriate buyer? Can factors solve the problem? The answer to both questions is “yes”: we can expand the function of buyer credit protection to be a kind of credit resource. Meanwhile, Chinese and foreign factors can jointly achieve this by changing current procedures. Chinese and foreign factors can together become “industry factoring organisers”. International factoring means that a factor provides international trade with financing, accounts management, collection and buyer’s credit protection system under the term of O/A or D/A. All members of the IFG observe the procedures of the “convention on international factoring” and “general rules for international factoring” in order to operate. After an exporter gets an order, he will just look for a local factor. Then the factor will ask a foreign factor to investigate the importer’s credit, including enterprise credit, scale, cashflow, sales history, market etc. On reaching the evaluation standard, the import factor will give the importer a certain credit limit and return it to the export factor. Using this method, factors can sit back and wait for customers. Currently, factoring business procedures issued by banks of China are clearly prescribed: “After an exporter negotiates with an importer about the contract, they will look for a local factor to transact factoring business”. This means that factors cannot undertake factoring without an order or it means that factors must look for customers who must in turn have an order. The order is a precondition of factoring. They will sit back and wait for customers or they will engage staff to do marketing work, but it will not only enlarge the operation costs, it may also not be very effective. This is the reason why banking factors in China cannot broadly develop international factoring. We could, however, change our opinion, and use “reverse marketing”. If Chinese and foreign factors negotiate with each other face-to-face, exporters will get orders and it will cancel out the middleman process. The profits of importers and exporters will be increased which will produce factoring business. At first, an overseas factor will confirm a buyer who is in good credit standing and will provide an export factor with the purchase information. Then the exporter factor will provide the information to an exporter and make him get an order. Thus, the factoring business is formed. In fact, Chinese and foreign factors will produce the customer and order for each other. The profits will be shared by the importer and the exporter. Factors will also get some of the commission. This is the so-called “functional expansion of international factoring”. Chinese and foreign factors together can create a chance to get an order by providing service to customers. In fact, they create the customers for each other. There are six classified export industries: textile and garments; machinery and electronics; foodstuffs including native produce and animal by-products; metal minerals and chemicals; light industry products and arts-and-crafts as well as the medicine and health industry. The mode can make foreign factors find their own orientation in the import and export industry of China and quickly enter into China’s factoring market. Chinese and foreign factors will jointly be “industry factoring organisers”. Integrating each other’s resource advantages, they will make them become their own resource and this is a kind of potential intangible assets. The operating procedure of “cross-border industry purchase” (in brief) Let’s briefly illustrate the operating procedure by taking China’s textile and garments exports to northern Europe (Denmark, Norway, Iceland, Sweden, and Finland) as an example. Organiser: Teanda (Tianjin) International Factors Co Ltd, factors of five northern Europe countries, the China Textile Industry Association as well as importers and the Textile Chambers of Commerce of five northern European countries. Supporter: local textile industry branch-associations of Zhejiang, Jiangsu, Guangdong and Shanghai, various industry large companies, foreign and economic ministries of local government, logistics enterprises and insurance enterprises. Time: in X month, 2008. Place: Zhejiang, Jiangsu, Guangdong and Shanghai. Activity forms: (1) Organise “purchase conference of textile & garments”. (2) Contact with factories for a visit. Taking Jiangsu for instance, Wuxi produces materials; Changzhou produces knitted products and cotton; Zhangjiagang produces chemical fabrics; there are more than 2,000 textile enterprises and there are more than 2,300 textile and garments enterprises in the city of Changshu. The export value reaches $420m. China Textile Industry Association looks for the most favourable exporters according to information regarding demand provided by the importers of north Europe. 1. The database of Teanda (Tianjin) International Factors Co Ltd (TFG) shows that there are more than 80 kinds of textiles and garments imported from China to the five countries of northern Europe. The import value is $1bn. Adding in the re-export trade by middlemen of Hong Kong, the total value is $2bn. There are approximately more than 120 importers and TFG will send all the information to the factors of northern Europe. 2. The factors of northern Europe check it by referring to domestic credit investigation channels and confirm a terminal importer who has a good credit standing. They will require the importers who are interested in transacting factoring to provide a purchase plan of 2008 in China, including variety, quantity, price, standard and sample etc.
3.
Teanda (Tianjin) International Factors Co Ltd (TFG) of China and
China Textile Industry Association gather introductory information
about importers from the factors of northern Europe and give them
some information about exporters (authentication, quality
inspection, production scale, equipment and quality). In addition,
we will provide samples, pictures and some information about the
companies’ credit. At that time, we will sign an intention agreement
and confirm who will come to China and when and TFG undertakes to
meet all the expenses associated with the activity, such as 4. After the purchase group arrives in China, the local industry branch of associations, foreign-economic ministry and the local branch of TFG will undertake to negotiate with exporters together with the purchase group for signing orders and factoring contracts. 5. Teanda (Tianjin) International Factors Co., Ltd (TFG) of China and factors of five countries of northern Europe will begin factoring procedures with enterprises holding an order. The above briefly describes the operating procedure of an “industry factoring organiser”. In reality, every procedure will have more detailed guidance on operations. Feasibility 1. Import and export value of China in 2006 has reached RMB1,700bn and it will probably reach RMB2,000bn. This will make it the third in the world. In the near future, maintaining links with the big export countries is an important development strategy for the economic increase of China. China has a small factoring share in international trade and there is great potential for development. The proportion of factoring in the European and American markets is greater than the letter of credit system. According to factoring trends, the factoring business will escalate. The IFG affirms and supports the “industry factoring organiser” idea put forward by the TFG initiator. The executive committee of the FCI held an export factoring promotion conference in May 2007 in Guangdong and Kunming. Members from various countries invited representatives of 200 local importers to attend. It was organised by the international department of the Bank of China. All of these facts show that China’s factoring market has a broad basis on which to expand and it indicates the beginnings of a competitive factoring market. 2. At present, the basic reason concerning China’s export enterprises is that production tends to lose touch with its markets. Export enterprises cannot make contact with international markets and the lack of a reasonable go-betweens offers little opportunity to meet with the supplier. The export market is too centralised, and the re-export trade and indirect trade takes more of a share of the profits. Exporters are controlled by middleman and it is difficult to access information regarding demand. If exporters negotiate directly with importers who have good credit standing, not only will the terminal profits be increased, but also bad debts will be decreased during the process of factoring. 3. Foreign factors could meet directly with importers, introduced by the China Industry Association, and confirm the credibility of an order when they undertake cross-border purchases. This eliminates the need for middlemen and reduces the import costs and expenses. 4. The international factoring market in America and Europe has been operating for more than 10 years and the market is saturated. The competition among countries is heating up. Integration and subdivision of “industry factoring” on international resources will make foreign factors find their own orientation according to the classification of Chinese export industries. Profit and added value One of the purposes of financial innovation is that it is beneficial in developing international markets for Chinese and foreign factors and will also be beneficial in order to meet the requirements of customers. Secondly, it will increase the factors’ profits. Thirdly, it will be beneficial for risk control. We can achieve this and it will increase the added value of international factoring functions. According to the above, “risk control” is the core issue of Teanda (Tianjin) International Factors Co Ltd (TFG) in transacting business. Investigating risk, accepting risk and managing risk is the permanent mission of TFG. If we want to develop the international factoring market, we should participate in competition. To be successful in competition requires a different approach. We should have innovative thought, innovative means and the ability to control risk. Only once our international factoring market sees expansion, can we turn our attention to the factoring market within China. About the author: Sun Hong, holds the position of chief financial manager, director of Teanda (Tianjin) International Factors Co Ltd and is responsible for customer operations, international operations, asset operation of company and finance. Ms Sun was born in 1966 in Tianjin China and graduated from Tianjin University of Finance & Economics. She holds the UK certificate of ACCA accountancy and the UK certificate of URS internal auditor. She went from the Industrial and Commercial Bank of China to a branch of China Bank of Communications. Then she was employed in Tianjin Xinmao Scientific Investment Co Ltd, the biggest private enterprise in China and there she held the position of minister of the investment department, standing vice-chairman of finance management centre and chairman of the audit department. In 2004 she was invited to Orbrich (China) International Factors Ltd and held the position of chief financial manager as well as head of the business department. She has made three important breakthroughs on the policy of foreign exchange management by working with the State Administration of Foreign Exchange. The State Administration of Foreign Exchange has finally agreed that Tianjin will be the designated company for non-banking factors to operate financial products and will roll it out across the whole country. Meanwhile, the management concept of writing off foreign exchange under the item of financial products, put forward by Ms Sun, for non-banking factors was approved. The breakthrough on management of foreign exchange has extremely high economic value and social value. In 2007, along with other investors Ms Sun established the first and only domestic independent factors in China: Teanda (Tianjin) International Factors Co Ltd. She holds the position of chief financial manager and director. Her many years of good-standing mean that the Industrial and Commercial Bank of China, Tianjin Branch of Agricultural Bank of China and insurance enterprises are in full cooperation with Teanda. Banks are becoming the stable backing power of Teanda (Tianjin) International Factors Co Ltd. The four functions of international factoring have truly improved in China. Teanda (Tianjin) International Factors Co. Ltd Cyprus Hellenic Bank Public Company Ltd During the first 10 months (January – October) of 2007 there was a substantial increase in the volume of sales. Factoring business was up with a high rate. The reason for this upward-trend, aside from the growth in the economy, was as a result of major organisational and operational changes which took place in factoring operations and the intense promotion of factoring products via the new structure. The most important economic development expected during the next month is the island’s entrance into the eurozone. The Cyprus pound will be replaced by the euro during January 2008. After the accession of Cyprus into the European Union and ahead of its accession into the eurozone, the island is continually growing its connections to the global economy with respect to trade, the export of services and investments to and from the island. Targeting the creation of synergies between the various units of the company, through 2006, a number of operational changes within the factoring service have been integrated. A new organisational and operational structure was implemented, with the factoring facilities incorporated under the corporate and commercial business divisions of the bank. Having highly trained personnel, the new organisational and operational structure and the new business development mechanisms, the company is expected to continue its upward factoring business. Since the establishment of the first factoring company in Cyprus in 1991, the factoring business has been growing steadily year-after-year, despite the ups and downs of the economy, exceeding 2.6bn in turnover in 2006. Phivos Nicolaides
Czech Republic Factoring Ceske Sporitelny, a.s. (FCS), Czech Republic Factoring Ceske Sporitelny expects to reach a turnover of more than EUR 1.2m in 2007 which means 10% growth compared to 2006. The Czech factoring market will grow by some 10% as well, and will reach EUR 4.9m. The market share of FCS represents 23.3 %. The Czech national economic situation is positive with 5.8% growth of GDP in 2007 (in 2008 and 2009 it’s expected to be about 5%). A very strong domestic currency (CZK) is not favourable for Czech exporters but international trade has grown despite this. The growth of international trade is 15% compared to the same period in 2006. Further positive economical development is to be expected in the coming year as well, due to recently adopted tax reforms which will decrease the taxes for entrepreneurs and will bring more additional sources for investments. Our experienced and well-trained staff of 37 employees prepared new products for 2008 which will increase the competitiveness of FCS, these include customer portfolio monitoring, supply chain factoring and reverse factoring. Important tasks will face our international department as export and import factoring will be our priority in 2008, and in particular, our sales staff will focus its attention on selling export factoring not only to traditional territories but also to the Far East, Latin America, China and south east Asia. Roman Studnicny
France CODIX With an increase of 30% in turnover compared to 2007, CODIX has again been successful with its single solution iMX, which is dedicated to factoring, ABL, invoice discounting, collection and credit insurance. The company now has 200 staff. After Bulgaria, Tunisia, Poland, a new subsidiary has been set up in Vietnam to support the growth of the CODIX Group in Asia. After the first implementation of iMX factoring in IFB (Brussels), KBC has decided to implement iMX factoring in all subsidiaries of the new KBC Group. Other important factoring companies are now working in close collaboration with CODIX to start implementation projects on iMX. 2008 will be – without a doubt – the year of iMX factoring! In other markets, CODIX has already taken a major rank. With clients on worldwide projects based on centralised and global corporate integrated systems as important as:
Each year, CODIX organises three important events:
Jean Louveau – Commercial/sales manager Compagnie Générale d’Affacturage – CGA – Groupe Société Générale Acceleration of the increase of processed volumes, +13.7%, strong and continuous decrease in prices, diversification of the product offer and development of non-reported factoring are some of the market’s major trends, which began to be visible in 2005 and were further accentuated in 2006. As such, the French factoring market has consolidated its third place in Europe after the UK and Italy, while becoming one of the main financing tools for SMEs. In this open-ended and highly competitive environment, CGA has once again produced excellent results this year, from all standpoints. With a processed sales figure up 30%, which has exceeded the 12bn threshold for the first time, a NBI up 20% and with a 22% increase in our net income, our company is showing that the efforts of its staff and the strategy implemented over several years are starting to pay off. The investments devoted to the quality and consistency of the service have provided for the renewal of our ISO 9001 certification and, in particular, they have helped us to maintain a high level of customer satisfaction and loyalty. The constant adaptation of our product range to the market’s needs has helped us to attract new clientele categories (VSEs, major companies, film producers, associations, companies in collective proceedings etc). The industrialisation and constant introduction of new technologies into our management processes have led to productivity gains resulting in a regular and quick decrease in our operating ratio over the last five years. On the products side, in 2006, the CGA teams designed and developed new products such as:
In 2007 and 2008, CGA is continuing its commercial development and extending its market share, by adapting to the needs of companies.
CGA Trust: dematerialisation of the remittance of receivables, protected by the electronic signatures of the customers. Bruno Mesnil Marketing and communication
Eurofactor France Economic growth in France should remain moderate in 2007 with household consumption buoyed by low inflation and by the continued decline of unemployment. The world economic slowdown, particularly in Germany, which provides a market for a quarter of French exports, will impede export growth. Companies closest to consumers benefited from the demand, while other sectors showed signs of weakness. GDP growth rate was thus 0.5% for Q1 and 0.3% for Q2 in 2007.
In
contrast with the economic situation, after a satisfactory 2006
exercise (+13.7% in volume), the French receivable market further
improved in the first nine months of 2007, even achieving a record
rate of the last 10 years in the third quarter (+26%). From the
trend of the first nine months (+22.5%), the annual turnover should
reach
Despite its already high turnover in the previous years, Eurofactor
has achieved a great performance in 2007, growing by 22.3% in the
first nine months. Eurofactor thus keeps its leading position in the
French market, with 22.4% of market share, in spite of the fierce
competitiveness, as recognised by all players. Together with its
European subsidiaries, Eurofactor’s turnover should exceed 42bn With over 800 employees, including 40 staff in the international department, Eurofactor France belongs to both international factoring associations, IFG and FCI, and works with around 70 correspondent factors worldwide. In 2008, Eurofactor will expand in the second largest European market in size, by setting up a new subsidiary in Italy. It will benefit from the Cariparma Friuladria Group, recently acquired by the No. 1 banking group in Europe*, Crédit Agricole Group, to which Eurofactor also belongs. For the future, Eurofactor is looking to develop even further its international presence and to keep its competitive edge through an innovative product range and excellent quality of service to be your favourite international partner par excellence. * in terms of retail banking revenues Jean-Pierre Vauzanges Group CEO
Germany Coface Finanz Gmbh Factoring solutions tailored to suit market needs – innovative and international: Coface Finanz. Since its formation in 2000, Coface Finanz GmbH has become the leading company in the German factoring and export-factoring market, and this in as little as six years. In 2006, Coface Finanz generated receivables worth approximately 16bn and obtained a market share of approximately 22%. This subsidiary of Coface Deutschland does not only have a strong presence in Germany though. Its affiliation with Coface (Paris) enables Coface Deutschland, to provide its clients with products and services in all markets. In this way, Coface is now in a position to provide financing solutions tailored to suit 15 different markets – lastly factoring was introduced in Denmark as well as in Singapore and Hong Kong. The Asian factoring market has grown considerably in recent years, and it is expected to grow even further in the future. The in-depth know-how of Coface Finanz, which, as the centre of excellence, has been accompanying the group’s international factoring roll-out, plays an important part in this. Currently, Coface Finanz’s core business lies with disclosed in-house factoring, which is applied both in Germany and abroad. Full service factoring comprising financing, risk hedging and credit management plays a minor part. However, Coface Finanz offers more than that. Companies with sound credit standing are given the opportunity to contract for reverse factoring in order to optimise their purchasing advantages. Unlike in traditional factoring, in reverse factoring it is the buyer, not the supplier, who initiates the process. Coface ensures that companies benefit from favourable conditions whilst insuring receivables due from the supplier. Moreover, Coface Finanz provides support to banks with their trade financing, thereby giving such banks access to further business opportunities in the forfeiting business (white-label-co-operation). “Coface SMART 100” is a special factoring solution with an annual turnover ranging from 15m up to 100m. The company sells its receivables to Coface Finanz and initially waives direct purchase price accrual. This product puts Coface Deutschland in a unique market position. Standard & Poor’s (S&P) international rating agency rated Coface Finanz at AA- for its long-term activity. It had already been given an AA rating by Fitch Ratings. Moody’s has affirmed the long-term activities of the German Coface Finanz at A1. Ratings generally simplify the relationships between the clients, the brokers or the banks. It goes without saying that Coface Finanz intends to uphold or improve these ratings and to proceed with the implementation of its strategic plan. Such a plan envisages the expansion of the “international roll-out” and thus the establishment of factoring in all countries in which Coface operates or will be operating. Currently, Coface operates in 64 countries. Further to this, integration will progress in more than just geographic terms. The market, too, is to be further developed. To this end, an NBI of 1.2bn and a market share of 10% are to be obtained by 2015. Jens Hoter General manager
efcom gmbh According to the German Factoring Association, the total revenue of the factoring branch in Germany has increased by 24.8%. This results in a turnover of 40.88m for the first half of the year in 2007. The market is very dynamic and promises increasing revenues for the entire trade. This offers both service providers and software suppliers an excellent potential for development. The most successful business year for efcom gmbh since establishment of the company in 2000 has been 2007. During this process, foreign markets were developed and new clients added to the German portfolio. More than 20 reputable factoring companies put their trust in the secure and efficient software solution. As a result of the good market situation, efcom gmbh will increase its number of employees to 24 by the end of the year, which will play a decisive role in shaping the companies’ future. The dynamic software supplier is looking forward to 2008, with bright perspectives and determination to obtain new markets. Together with its corporate partners, efcom trusts in the excellent reputation of its services and further development of the factoring software portfolio. The factoring specialists at efcom expect an unchanged high demand from the German market, as well as continued growing interest from the neighbouring European markets. Kai Hunsicker Management assistant/marketing
Eurofactor AG – Germany
The
German factoring market shows stable growth due to a positive
business climate, a rising acceptance of factoring and a still high
market potential, penetration rate in Germany of 3.1% of GDP is
still below European average. This growth tendency is expected to
continue Eurofactor is among the top three service providers for factoring in Germany. In two-factor import factoring, Eurofactor is the market leader in Germany and one of the leading factoring companies worldwide. It is a member of the two worldwide factoring associations: International Factors Group (IFG) and Factors Chain International (FCI). In 2006, Eurofactor Germany was awarded by the IFG in terms of quality service to its associated partners, both as the “import factor of the year” and as the “export factor of the year”. Eurofactor not only received awards for the quality of its services but was also honoured with the top job award for its human resource management as one of the top 100 medium-sized employers in Germany. Eurofactor has 81employees at present. Its strengths in offering custom-tailored solutions, international expertise and excellent service has generated an above average turnover growth to almost 7bn – a 39% increase in 2006. A double digit turnover growth will also be generated in 2007. Eurofactor Germany offers its clients a wide range of factoring solutions from full service, maturity, export and import factoring, invoice finance and special commercial finance solutions, such as European Pass (an integrated European finance solution for corporate groups). Klaus Taube CEO
GE Heller Bank Since its integration into GE Commercial Finance more than two years ago, GE Heller Bank has grown in sales, number of employees and offices.
In
2006, GE Heller reported its best year ever with a factored volume
of more than 13bn, and in the first half of this year delivered
sales of As a result of positive development, GE Heller expects a further double-digit growth for 2008. Nevertheless the entire German factoring market will have to deal with the future implementation of the business tax reform and its risks. Since GE completed the full acquisition of Heller in 2005, the Mainz-based bank has expanded its workforce, benefiting the Mainz area. The number of employees has risen from 130 to 175 with further positions to be added in the next few months. GE Heller takes on eight apprentices each year and many of these go on to assume full-time positions in the bank. GE Heller has also expanded its branch presence throughout Germany. Last year, it opened new offices in Hamburg and Leipzig, extending its network through northern and eastern Germany and adding to those already in Düsseldorf and Munich. Next year, the bank plans to open three new offices to cover the south and central part of the country: Stuttgart, Nuremberg and Hanover. The expanding office network will help Heller adopt a more local approach and win new customers. The offices will be staffed by locals from the regions, important in Germany where there are significant regional differences in dialect, cultural habits and ways of doing business. “We are reaping the benefits of being part of a large company while at the same time keeping a local, personalised approach to our clients,” said Joachim. “GE Heller is unique for our ability to offer customers increasingly customised products as well as a pan-European and global network. The latter is very important in Germany where many mid-cap companies have global operations and financing needs.” Joachim Secker CEO
Quorum AG Quorum AG seizes growth opportunities in Europe, Germany. This year, 2007, has seen an incredible period of change, accompanied by remarkable levels of growth for Düsseldorf-based Quorum AG. Having started the year offering a traditional factoring service, the company’s obsession with client-driven service enhancements and innovations has spawned a growing range of solutions, including a low-touch factoring service and a new confidential invoice discounting service specially tailored for SMEs. With a current total of over 375 clients, Quorum is well on-track to achieve an increase of over 50% sales growth since the beginning of the year. Next year, 2008, promises to be no less exciting. Having developed particular expertise and success in the German transport sector, Quorum will launch a new card-based service for transport businesses in January 2008, further demonstrating its commitment to helping SMEs. January will also see the opening of a new Quorum office in Barcelona, with other European offices planned later in 2008. One of the key challenges will be to effectively promote the Quorum brand across a range of sectors and territories and to build trust in what is still a relatively new name in the market. Some serious marketing power is going into the expansion plans to ensure the brand is distinctive and recognised as a trustworthy partner and SME champion. Another challenge will be the continuing recruitment of a growing international team with the relevant expertise and drive to further develop the business and exploit the many opportunities from a market which is still much less mature than that in the UK.
Universal Factoring GmbH, Essen Having begun operations at the beginning of 2007, Universal Factoring rapidly gained speed in the market as the company won a number of customers from different industry sectors. In Germany, factoring is a boom market. In the first half year of 2007, the volume of receivables bought by factoring companies increased by 25% to 41bn. Currently, only 4,400 companies sell their receivables to factors. Thus, there is still tremendous potential for further growth. The factoring market offers great opportunities. But as for any factoring company, defaults on payments or even insolvencies by debtors pose a risk. Universal Factoring protects itself against these risks by state-of-the-art procedures in risk management, based on 15 years’ experience of the parent company GFKL in receivables management and on the latest IT technology. In its sales activities, Universal Factoring profits on the established market position of the leasing and debt-collection companies of GFKL Group in the SME segment. GFKL Group is one of the leading non-captive leasing companies and the fourth largest debt-collection specialist in Germany. In concert with its sister companies, Universal Factoring is able to provide its customers with one-stop solutions which cover all aspects of sound liquidity management. The staff of Universal Factoring consists of 15 specialists, each of whom hold several years of indepth experience in the financing market. The outlook for 2008 is very promising, for us, as for the market in general. We anticipate the substantial growth rate of the German market to continue in 2008. As to Universal Factoring, we expect even to outperform that rate. Thomas Maletz Managing director
India Bibby Financial Services India India is an incredibly important territory in the sphere of global trading and, as such, one in which the Bibby Financial Services Group was excited about establishing an operation. With economists predicting that the Indian economy will overtake the UK, France and Italy, to become the world’s fifth largest within a decade, the country certainly represents an attractive proposition for foreign investment and global businesses with an interest in both importing and exporting. Now is a very exciting time to be in India. Indian exports have recorded impressive growth rates over the past few years and, despite a recent blip caused by higher capital costs and increased red tape, I am confident the economic opportunities in India look bright as we head into the new year. With a growing economy and an established and sophisticated business finance market, India represents a compelling case for overseas companies looking for business opportunities. Unlike other countries, red-tape for imported goods is minimal in India and most of the time the importer buying goods will take care of all local bureaucracy and duties, which makes life easy. In addition, the growing passion among Indian businesses for alternative financial solutions is a sure sign of confidence amongst Indian SMEs, and with such a wave of entrepreneurial spirit across the country, we are sure the Indian market is now ready for our unique range of alternative funding solutions. As part of the Bibby Financial Services Group, we are a committed member of the IFG with five of our companies across our global network representing key trading regions now members the UK, Poland, Czech Republic, North America and India. Our network complemented by our IFG membership now gives us a strong proposition to our clients in assisting them in their cross-border trading activities. Vikas Nanda Managing director
Israel Clal Factoring Ltd Clal Factoring, established in November 2000, is a part of the IDB group, the largest non-banking financial group in Israel. The company is the largest factoring company in Israel, leading with a market share of about 33%. Clal Factoring will reach a turnover of about 410m in 2007 (65% local, 35% export), maintaining a growth rate over 35% a year, as well as its market share and its leading position in volume, professionalism and ingenuity. The company employs 22 workers, and recruits one in every quarter, on average. The factoring market in Israel from the time the company was established until the end of 2007 changed dramatically from an estimated 100,000 annual turnover made by two small banks to an estimated 1,200m in 2007, with a growing number of players including, beside Clal Factoring, the largest banks, credit card companies and private factoring companies. Most of these competitors entered the market in 2007 and intend gaining a market share throughout 2008. The rapid development of the Israeli factoring market in the last year will affect our business in two directions. The entrance of major banks and financial groups will lower prices in the short term, and demand greater marketing and sales efforts. On the other hand we already experience a wider acceptance of the factoring tool in larger and public companies, a rapid growth in market size, and an all over rise in demand for factoring services among companies from all sizes and sectors. The boom in the Israeli factoring market is supported by local macro-figures that show a constant growth. The Israeli economy experienced a growth of 5.1% GDP in 2006, and is expected to rise by 5.4% until the end of 2007. Unemployment rates have decreased from 8.3% in 2006 to 7.4% in 2007. The massive changes in the factoring market and growth in the Israeli economy open up many opportunities for factoring companies. We believe that factoring turnover will rise another 30% in 2008, up to 1,600m. During 2008 we will witness a competitive market where service level, efficiency, variety of corporate financing products and experience will define every players place in the competition. We will do everything we can to keep on leading the market. Ariel Moses V.P. marketing and operations
Poland Pekao Faktoring, Poland A member of International Factors Group, Factors Chain International and the Polish Factors Association. The financial results of Pekao Faktoring in past 10 years made the company the leader in Poland. As the company realises the process of clients’ portfolio diversification since two years, the turnover will continue to grow. In the first three quarters of 2007, the company serviced factoring transactions to the value of 730m, 11% more than in 2006. We are the unquestioned leaders of international factoring In Poland. The turnover of international factoring transactions at the end of Q3 reached 246m, 105% of 2006. The Polish economy remains very healthy. The national product grows 6% year-on-year, and is a conducive factor for factoring industry (factoring makes up 1.8% of Polish PKB). Factoring companies’ turnover grows at the rate of 18% year-on-year. The economic environment does not impact the company at all. Our clients’ portfolio is stable and covers the whole territory of Poland. I am very glad to see the growth of Polish exports. For my company it forecasts a boom in serviced international factoring transactions. The coming year, 2008, is going to be extremely important for Pekao Faktoring – this is our tenth anniversary. I am satisfied looking back over the years. Pekao Faktoring was an active creator of the factoring industry in Poland. Our impact on the content and the quality of factoring facilities is very strong. The volume of sales during past year’s was always the highest compared to other Polish factoring companies, Pekao Faktoring has been the leader since 2000. The economy in 2008 promises well, so does the business outlook. I am concerned that the Polish currency will get stronger (appreciation can be a barrier for Polish exports) for as I already said, international factoring is the significant part of Pekao Faktoring’s portfolio. I expect the factoring industry will go to the next stage of development, and that we’ll welcome new players onto the market and competition will become stronger. People are the treasure of my company. Realising the personnel policy I ask the staff to aim for – of becoming the most highly motivated, strong and fully integrated team of professionals one can find on the market. I use a system of continuous training. All of the staff are under a system of on-the-job and external training. Such a system increases the development of knowledge and skills. I think it’s the best system for training factoring staff in Poland. Sales growth: I would like to encourage the growth of international factoring services and to keep the leader’s position in Poland, of course. Mirosław Jakowiecki President of Pekao Faktoring Sp. z o.o.
Portugal Eurofactor Portugal It is fair to say that Eurofactor Portugal is a fast growing company, after five consecutive years of double digits in the growth rate. Since 2002 we have multiplied our annual turnover by 2.35% and in 2007 we remain the fastest growing company in the Portuguese market. Portugal is a small and very open economy, strongly affected by international economics, positive or negative, and with a big internal constraint that is the Estate Public Debt which undermines the ability to grow, with very tight taxes and public expenditure policies. Consequently we have very low growing rates (0.3% in 2005 and 1.2% in 2006) and negative growth in the investment side (-3.1% in 2006). The good news is that we have a stable government with a clear policy to reduce public deficit that is starting to bring results: after several very difficult years, we expect to see the economy growing 1.8% to 2% in 2007 mainly due to the recovery of private investment and exports. The factoring industry in Portugal grew up strongly in volume based in the public debtors and building industry. Now the market is facing maturity and the end of this growing cycle. In order to succeed all players will try to be more competitive in pricing and explore new products and markets. Eurofactor Portugal is the market leader in the international business but now we will probably face an increased competition in this niche. The challenge is to remain innovative and competitive in terms of factoring solutions, with new products that meet market needs, while improving quality of service towards clients and international factoring correspondents (IFG members). Being and remaining competitive and fast growing over the years is possible but only with a highly motivated and skilled team. We have a small (30 people) and young team committed to company values and objectives shared and known by all. Flexibility, capacity to adapt to new situations or tasks and team spirit are key success factors. For 2008 we are ambitious to grow again above 10%, facing an increasingly competitive market. This will be our challenge that we expect to achieve by expertise and innovation. From the operational point of view we will start 2008 with the launch of our new IT system. We are working in order to assure that this big change will happen without any client disturbance in the beginning and great improvement in efficiency and service quality for the future. Rui Esteves Managing director
Romania ING Commercial Finance IFN SA ING Commercial Finance IFN SA (www.ingcomfin.ro) was established in September 2006 as part of the ING Group and one of the first specialised factoring companies in Romania. During the first six months of business, the company achieved a total turnover of 5m on domestic and export market. Having already in place domestic and export products, with and without recourse factoring, with the recent launch of import factoring services, ING Commercial Finance is able to satisfy a wide range of requirements and needs, even for the most demanding clients. Despite the fact that ING Commercial Finance is a new player in the Romanian factoring market, and facing the competition dominated by the banks, it has enough space for development. Its added value consists of the following: Services:
Simplicity of documents and speed of response: As for opportunities, there is first, domestic factoring, followed by cross-border factoring, export being expected to be overseen by import factoring business. ING Commercial Finance is already involved in import business based on the increased figures on Romanian imports as well as the increased interest of foreign factoring companies in covering the credit risk, monitor and a professional expertise for the Romanian debtors. As possible threats, it might be the possibility of more restrictive regulatory measures of the National Bank, following the trend of regulating the activities of factoring companies (as non-banking financial institutions) closer to the rules applicable to the banks. Also, the increasing number of factoring competitors will probably generate a decrease in factoring prices. The staff of ING Commercial Finance numbers 10 people involved in the main sales activities – regional sales people, besides the sales force of ING Bank – operations, risk, marketing, communication with foreign correspondents, insurance, other parts of the company activities being outsourced to the ING Bank or other specialised entities. There are good prospects for the coming year for ING Commercial Finance. After the early stage of building the company and the team, the current focus is on business. The turnover is expected to increase in 2008, on a secure basis and with the main target being client satisfaction and high quality of services, rather than on volumes and market share, by any means. The ultimate goal would be to lead the Romanian factoring market and to always be the preferred factoring player for most companies. Camelia Hajal Export manager
Russia Eurokommerz FC The factoring market in Russia and CIS has huge potential and its volume is doubling annually. Analysts estimate its potential volume in 2007 to be $250bn. The real volume in 2006 was $11bn, the forecast for 2007 is $22-25bn and the forecast for 2008 is $45-50bn. The Russian factoring market is growing rapidly and is attractive for new local and international players, but to successfully offer factoring services in Russia and CIS it is necessary to overcome some serious barriers. We can mention the following as being the most important:
Eurokommerz CF is the leader in the Russian factoring market, and has managed to overcome all these barriers during the seven years of its development and successful work. Today Eurokommerz controls 23.6% of the market by the amount of purchased receivables and about 40% of the total number of clients. The regional network of Eurokommerz consists of 57 subsidiaries including offices in Ukraine and Kazakhstan. The company’s shareholders consist of the management of the company (49.9%) and Russia New Growth Fund (50.1%), an investment vehicle managed by Troika Capital Partners with beneficiaries being EBRD and Temasek Holdings. Turnover of the company in 2006 was US$2.3bn, the forecast for 2007 is more than $6bn. The portfolio of Eurokommerz in September 2007 exceeded $1,06bn; at the same time we’re expecting it to be $1.8bn by the end of 2007. Also the equity capital will increase from the current $180m to $336m by the end of 2007. Net profit for H1 of 2007 is $25m. The forecast for the end of 2007 is $100.8m. Ilya Volkov
Vice-chairman of the board of
Interregional Factoring Company TRUST Interregional Factoring Company TRUST was founded on 7 April 2006. Turnover of the company for 2006 was approximately 180m. For the past 10 months of 2007, the turnover has almost tripled the amount of 2006 and come to 460m. By the end of 2006 we are planning to achieve at least 600m. Since the beginning of the Russian factoring market development in 2002 it has been growing by 138% on average per year. The market volume in 2006 was $11bn. During the first half year of 2007 the volume of bought accounts of receivables has reached $7.3bn, demonstrating 100% growth in comparison with corresponding period of the last year. There are enough grounds to believe that the $22bn dollar forecast for 2007 will be most accurate. The growth of the Russian factoring market is based upon a favourable economic situation, high growth rates of the national economy, development of wholesale trading and wide-scope development of trade chains all over Russian Federation. At the same time, the big problem is still an undeveloped system of credit bureau, which does not mitigate the risk of factoring companies and prevents the development of non-recourse factoring. Excellent opportunities for the factoring market in Russia are given by the increase in small and middle business share of the national economy. Currently the demand for funding from this sector is remarkably high (about $25-30bn) and satiated only for 30%. Besides, there is one more growth factor the possibility of spreading the business across the regions. Today 60% of factoring companies are concentrated in Moscow and St. Petersburg, leaving only 40% for the rest of the vast Russian territory. We believe that further growth of the factoring market in 2008 will be based on a rise in small and medium business share in the economy and increase in the number of regional clients. Besides, year 2008 will involve qualitatively new and higher level technologies in client service. Clients who use factoring already do not consider it only as a means of funding, but take into consideration such services as accounts receivable management and risk insurance. Therefore, companies working in the Russian market will be investing significantly more in software development. We strongly believe growth rates in 2008 will be remaining the same, and the volume of factoring will be approximately $45bn. Yury Volkov Chairman of the board of directors
National Factoring Company (Joint-Stock Company) NFC is the first independent factoring company in the local market with over eight years’ experience in the business. Member of IFG and FCI. Factoring turnover for 2006 scored $1.8bn which represents a 233% growth in three years. Preliminary 2007 results confirm that the positive trend will persist in the current year. In order to keep up such a growth rate, NFC strives to expand the product range. In 2007 NFC launched “Express Factoring” for SMEs, a joint sales project, “Syndicate Factoring”, with Russia’s second largest bank VTB. Plans for 2008 include supplier finance, ABL and other services. NFC plans to maintain its leading position in the non-recourse segment that is becoming very popular among clients. The Russian factoring market is one of the fastest growing markets in the world with a growth rate of around 100% per annum for the sixth consecutive year and an estimated volume of $22bn by the end of 2007. The factoring market benefits from a favourable economic situation marked by a 7% GDP growth rate supported by a 14.8% growth of retail trade, 6.6% growth of production and a 28.3% growth of foreign trade. The main challenge for NFC and other Russian factors continues to be local legislation, including problems with enforcement of court decisions, restrictions on currency transactions and complicated banking law that does not recognise the difference between factoring and bank loans. A lack of qualified personnel is another problem in immature markets. Nonetheless, in general, its positive business environment and high profit margins continue to attract new marker players resulting in a considerable rise of competition, especially in the last two years with around 25 banks and factors offering factoring in 2007. Consolidation and arrival of foreign factors is expected in 2008. Corneliu Robu Head of underwriting and international
Slovenia Prvi Faktor, Slovenia Prvi Faktor was established under the name of LB Factors back in 1994 as the first Slovenian factoring company. Ever since, it has been the leading factoring company in Slovenia. In recent years, our strategy has been expansion into new markets. This coincides with our vision aimed at becoming one of the leading and most successful factoring companies in Central and Eastern Europe. Prvi Faktor underwent a 137% increase in acquired accounts receivables for 2006, achieving a turnover of about 500.36m of which 86% came from domestic and 14% from international factoring. Slovenia has been using the euro as currency since 1 January 2007, and because of this Prvi Faktor is confident that international factoring will increase in Slovenia and positively influence competition within the industry. Under the statistics from Statistical Office of the Republic of Slovenia in 2006, GDP per capita was 15.167 and is up by 9.9% from 2005. In August 2007 registered unemployment was 7.4%. Compared with same period of 2006, it declined for 1.7 basic point which is the lowest level since 1991. Imports of goods and services for the first seven months was 2186.6m, when export of goods and services was 2146.2m. That produces a minor net deficit which is the result of a bigger growing rate of import than of the export rate. The productivity level for the first seven months in 2007 was 7.7%, compared to same period last year of 8.6%. According to Moody’s Agency the country risk rating improved to Aa2+ when last year’s rating was Aa2. The Slovene factoring market is comprised of three companies: A Faktor – an FCI member, Finea Holding – an FCI member, and Prvi Faktor – a member of both international factoring groups, FCI and IFG.
Future trends
Prvi
Faktor, being the leader in Slovenian faktoring market, sees a great
opportunity for factoring business in the countries of the former
Yugoslavia to introduce and provide new, sophisticated financial
instruments to local, quite shallow financial markets and to support
lively trade and trade relations between the partners which operate
in the once-unified Yugoslav market. With this in view, Prvi Faktor
Zagreb, Croatia was established as a fully-owned subsidiary in April
2004 and has already made a substantial turnover last year amounting
to 213m; Prvi Faktor Belgrad, Serbia was established in February
2005 with turnover The following graph shows the total turnover of the Group of Prvi Faktor at the end of September 2007, which includes Prvi Faktor Ljubljana (Slovenia), Prvi Faktor Zagreb (Croatia), Prvi Faktor Beograd (Serbia) and Prvi Faktor Sarajevo (Bosnia and Hercegovina). At the end of September 2007 Group of Prvi Faktor achieved a turnover of 549m, therefore all group companies reflect extraordinary growth in 2007, which is still in progress. In Slovenia, factoring is already a well-known insurance and financing product, but there is still room to improve the figures made in previous years. Steady growth is expected and more competitors from abroad are expected to be selling factoring services directly in Slovenia. Ernest Ribic Managing director
Spain BBVA Factoring Spain BBVA Factoring will record year-on-year growth of 18%, with a forecast business volume of 24,345, up 9% with regard to 2006. We are beginning to see a certain increase in payment installments, mainly in those sectors related to construction. The factoring and confirming activities are geared to the GDP trend. A slowdown in their growth could affect the evolution of the sector. Added to this fact are the regulatory changes that have been taking place over the last few years. BBVA Factoring, as the benchmark and leader of the sector, must adapt to these new realities, with ongoing improvement to our product portfolio. BBVA Factoring boasts a broad and specialised commercial network that provides service to the different units of BBVA clients throughout Spain. Given that the BBVA distribution network plays a key role in the relationship model of BBVA Factoring, 2007 saw BBVA Factoring adapt itself to the new BBVA business configuration in Spain. There are currently seven regional branches, the same as BBVA. In order to foster international business, with large-scale growth in recent years, specialists in the international area have been transferred to different regional branches. BBVA Factoring is currently working on a new strategic plan for the 2008-2010 period. The purpose of this plan is to increase the rate of current expansion, growth that is way above those recorded for other substitute products. Carlos Olivares Sanchez Director general
Eurofactor Spain The Spanish market keeps on growing after many years. This year the sector probably will close up to 20% growth. Factoring to suppliers, a product that supposes about 45% of the total factoring market, also maintains its growth more or less at the same levels as the factoring business. Eurofactor Hispania continues to be the leader of the international two-factor system in the Spanish market, with a total amount around €900m. But we are also experiencing nice growth in domestic business, which leads us to a total turnover for this year of around 1.500m. So while the market is growing, as stated, at around 20%, we will close the year with approximately 35% growth, a big success for our company. In terms of quality, we are also improving. At the recent annual meeting of the FCI in Santiago de Chile, we were rated number 20 (FCI total members is about 220) in terms of quality, and considering that this is our second year in this organisation, it makes us very proud and confirms that we are on the right track and that our correspondents rely on us. At the same time, we keep on developing our role in IFG, where we are one of the three most active members in terms of volumes. Regarding the future, growth in Spain this year will be about 4% and a certain decrease is expected in the next year, mostly as a consequence of the global uncertainness resulting from the sub-prime crisis, and even considering that the banks in Spain are not affected, we do not live on an island, and so if neighbouring countries are affected we will also have experience some of the impact. Also, but not linked with the first problem, real estate business is suffering a decrease in its activity, but the forecast is that prices will go down but not dramatically. This is just a correction in the normal situation after many years of continuous and intensive growth. The related construction sector which provides jobs will be also affected, but even with all this, a cautious GDP 3% growth for next year is expected. Josep Selles Managing director
Switzerland UBS Factoring AG The Swiss factoring market is expanding rapidly, albeit from a low level relative to neighbouring countries. A large contribution to this growth was made by UBS Factoring whose factored sales increased by some 40% year-on-year in the first nine months of 2007. New and improved systems support has led to higher efficiency and sophistication in back-office and risk functions as well as improved product delivery. Staff numbers have remained at a constant 60, but there was a shift of resources from back to front-office functions. The Swiss economy benefits from the favourable global environment and, due to excellent export performance, GDP grows at over 2% per annum. Competition is increasing from domestic as well as foreign factoring companies, some of whom have already, or plan to, set up operations locally. Over the last few years, the market has seen the introduction of various new products, including in-house factoring. The latter is primarily responsible for the rapid growth rates. Hopefully the new competitive and product environment will help to increase the low acceptance of factoring in Switzerland. If the current global financial crisis subsides without further worsening, we look with confidence and high expectations to 2008. Beat Wespi CEO
Turkey Garanti Factoring Services Inc, Turkey Garanti Factoring Services Inc, one of the first factoring companies to be set up in Turkey, joined the Garanti Financial Services Group in 1996 when Dogus Holding acquired a majority stake in the firm. Garanti Factoring reaches its customers by means of its own direct marketing team and through the nationwide network of GarantiBank branches. Unique service and a company with a difference. Structuring all of its activities within the framework of its unique perception of customer and quality-focused service, Garanti Factoring offers its customers the complete range of domestic and international factoring products and services. Having shaped its corporate strategy around the concept of creating value for the customer, Garanti Factoring is a service-provider that distinguishes itself by its perfect performance as well as by the importance it gives to corporate governance, its financial strength, and its competent human resources. A true example of sustainable growth by virtue of the consistent performance that it has registered since 2001 and having successfully raised its market share to over 12%, as of end-2006, Garanti Factoring had total assets worth TRY 673.2m. Garanti Factoring’s strong stance puts it among the leading companies that shape the course of the factoring industry in Turkey. Rated by Fitch Ratings one grade above its national rating, Garanti Factoring is a member of the world’s two biggest factoring networks: Factors Chain International and International Factors Group. Working with an extensive network of correspondents, Garanti Factoring is a respected and active player in international markets. One of the main characteristics of the Turkish factoring sector is that 80% of factoring volume is comprised of domestic business. In the domestic arena low interest rates increases already existing strong competition in the last years. Turkey is also a major business provider in the two factor export business. Even so, there is still a large potential as the factoring volume still only covers Turkey’s open account exports. The sector has been consistently growing more than the average growth rate of Turkey since 2002, and the same is expected to happen in 2008. While the factoring sector is expected to grow between 25-30%, Turkey’s growth rate is expected to be 5.5%. As to the Turkish economy; as a growing emerging market, growth is picking up on improved political stability, lower interest rates and a stronger currency. Inflation is still on a decline albeit at a slow pace and we expect the central bank of Turkey to continue to cut rates. The widening current account deficit is comfortably financed by FDI and the corporate/banking sector but the rise in private sector external debt needs to be monitored closely. Cengiz Üçbasaran General manager
Ukraine Ukrainian Financial Group Commercial Bank, Ukranian Financial Group, CB “UFG” is a universal commercial bank offering a range of modern high-end services. The statutory fund of “Ukrainian Financial Group” bank amounts to UAH36.192m. By strategic business characteristics, our bank is classified as a customer-oriented bank, putting the interests and needs of its customers and business partners first in all operations. Recently, however, experts have been also defining CB UFG as a factoring bank, as it has one of the leading positions on the factoring service market of Ukraine and places a high priority on factoring services in its operations. A complex of financial services we provide to our customers in exchange for transfer of their accounts receivable allows them to acquire current assets quickly and efficiently and to develop their businesses as per their ambition, knowing they would have access to current assets over a long-term period. This service package includes mortgage-free financing of the customer’s sales on deferred payment terms (both in Ukraine and abroad), account receivable management, collection of accounts receivable, evaluation of accounts receivable and regular reporting of its results to the customer, efficient risk insurances and more. Today, the services of CB “Ukrainian Financial Group” are in high demand by small and medium businesses. Their interest is very important to us because, firstly, this category of entrepreneurs is extremely important for the successful development of the national economy and democratic reform of the society, and secondly, this category of customers is in especial need of a reliable, efficient, truly skillful and caring business partner. The bank had determined this work direction to be one of its highest priorities. Small and medium businesses as well as natural persons-entrepreneurs are offered an efficient package of modern bank services, which includes, but is not limited to, factoring and investment operations, micro financing, corporate and retail banking services, profitable allocation of assets, and more. Our customers also have constant access to consulting services on the whole range of business issues of interest to them, in the consulting network of the UFG business family. Investment business is one of the key UFG priorities. Our staff are utilising a unique efficient investment system suitable for the features of the Ukrainian market, developed over the years within the Ukrainian Financial Group business family – one of the most renowned and successful of the national investment structures. In this area, our bank offers its services as an investment advisor, investment manager, investor or co-investor. CB UFG staff offer their customers all means for successful investment operations using in-house developed know-how allowing the customer to invest in the most profitable and prospective projects at any time. Our VIP-customers are offered unique prospects and opportunities. Each of them is offered a special range of high-quality financial and supplementary services contributing to the dynamic development of their business, considerable growth of the invested assets, profitability rise in business projects, and optimisation of partner relations. If needed, CB UFG becomes a highly professional consultant, an experienced assistant, a mediator for solving tasks of any level of difficulty, or a reliable partner in exclusive joint-projects requiring coordinated work of the commercial and investment departments of the bank. Some of our services in this direction are providing know-how which gives our VIP-customers exclusive opportunities on the Ukrainian market. Another special feature of our services is our financial supermarket, created in CB UFG according to European standards of customer and business service. The financial supermarket is a complete range of services provided not only by UFG bank, but also by Ukrainian Transport Insurance Company CJSC (UTICO) and Ukrainian Financial Group JSC (UFG JSC). Catherine Bondarenko Manager international
UK Atlantic Risk Management UK Atlantic is growing at about 15% per annum. This has been fuelled by higher activity in terms of specialist audits including cross-border transactions and high risk reviews as well as an increased level of business in respect of case management and work outs. We see a continued demand for risk management services emanating from a weakening economic environment in the UK, a general tightening of credit and the impact of aggressive business acquisition strategies from the financial institutions that we service. The challenges emanate from more complex deal structures, often involving different asset classes and location: also our ability to recruit the right calibre of human resources to reinforce increased business activity and standards. The opportunities in a declining economic environment are evident and we see that our clients are looking to us to provide a wider range of services and support, enabling them to fulfill their business objectives. Fraud continues to provide the biggest threat to our clients and tightening of credit policies along with declining business circumstances is likely to increase the propensity to fraud. We have strengthened our team this year and we are lucky to have the largest independent group of asset-based lending expertise in Europe. We see 2008 as being a difficult year in terms of increased levels of problem deals and client delinquency. It will take some time for the turbulence in the global credit markets to unwind. The impact of this on the economy in general, and asset-based lenders in particular, is unpredictable but unlikely to be good news. Over the last 12 months we have worked in 17 different countries, have case managed over £200m of funds, launched an electronic audit product and Atlantic has been voted Due Diligence Company of the year Business Money 2007. In our tenth year, Atlantic is focused on developing opportunities in Europe and the USA. Joanna Bennett-Coles Managing director
Bibby Financial Services Bibby Financial Services (BFS), a global business finance provider became a committed member of the IFG earlier this year when five of its global companies, the UK, North America, Poland, Czech Republic and India became active members. Now with a network of 31 operating companies across 10 countries including, the UK, Ireland, Poland, France, Czech Republic, Slovakia, USA, Canada, Australia and India, Bibby Financial Services has the ability to service and facilitate cross-border trading through our large network of global companies. And even in those countries where we do not currently have a presence, Bibby Financial Services is delighted to be able to use our IFG membership to offer our clients a seamless service regardless of where they are trading across the world. Through our international business based in the UK, we have our own team of experienced multilingual staff, which lowers the language barrier that many exporters face and takes the hassle out of dealing with overseas customers. Through our extensive network of international offices, we can also use local knowledge and understanding to ensure clients are paid on time wherever they are in the world. Bibby Financial Services provides a seamless, pan-global service that gives clients the peace of mind that their best interests are being looked after on a macro and micro-level and that they can trade confidently, knowing that cash will continue to flow. Our strategy is to continue our expansion into overseas countries and in doing so provide our clients with the confidence that we can work with them to facilitate their overseas trading. We are delighted to be joining the IFG as it supports our global expansion strategy by giving us access to a valuable network of factoring companies which helps us cater for all our clients’ needs. Martin Warman Managing director
China Export Finance UK China Export Finance has so far enjoyed its first full calendar year of trading (year-to-date), experiencing month-on-month growth of between 20-100% so far in 2007. This has resulted in booked business already accounting for 400% growth so far for next year. China has reported a 11.5% GDP growth so far this year – domestic growth in China is booming as is the economy. In addition the “credit crunch” will have a positive effect on our business by creating further opportunities. CEF’s challenge is to manage business growth. The threat to the Chinese manufacturing industry is increased international competition which is having the effect of reduced price benefits. Our opportunity comes with the strength of the Chinese labour force, currently at 800 million with 26 million forecasted to be added each year. CEF has full operational teams in Europe, the whole of east coast China and across the USA. This gives the company a strong infrastructure with significant capacity, and an international team of experienced, knowledgeable and talented professionals. CEF are confidently looking forward to next year. We expect 1000% growth for 2008 (calendar year) as a result of the economic growth experienced by China. The figures published for the end of Q3 2007 show that exports contributed 21.4% of the additional economic growth, while new investment and retail sector performance contributed 41% and 37% respectively. As the third largest contributor to the economy, which is forecast to grow for the foreseeable future, China manufacturing gives CEF great confidence for 2008 and beyond. Ann Putty Senior marketing manager
Eurofactor UK Generally, Eurofactor UK has had a steady 2007 with a small increase in turnover overall from £1.76bn in 2006 to £1.83bn annualised to the end of 2007. International business at Eurofactor UK has grown very well from £178m in 2006 to £205m in 2007 – an increase of 15%. The number of international clients using us now stands at 160 and debtors at 1,230. This increase shows the confidence that IFG members have in the service provided by Eurofactor UK through our international and credit team of Richard Hall, Martin Almond, who joined us only a few months ago, and Julie Curtis. And indeed Eurofactor UK was marked as the best UK import factor by members of the IFG. Generally, 2007 has been a stable year economically in the UK. The credit crunch has had only a small impact to date but concern is mounting about insolvencies in the UK with the last quarter showing the biggest rise in insolvencies for nearly 10 years. So the prognosis for 2008 is one of only guarded optimism. The economy is strong but there are still concerns about the banks’ lending to the sub-prime market and its impact on cost of borrowing for businesses. This could in turn lead to some difficulties for SMEs, some of which won’t survive the crunch. Eurofactor UK is ready to meet the challenge of a more difficult credit insurance and collections environment and if ever there was a time to ensure that cross-border sales are properly insured and collected, it is now. Import/export including IFG – annualised from y.t.d. figures: T/O as at year end of 2007: £205m Number of clients: 160 Number of debtors: 1230 T/O as at year end of 2006: £178m Number of clients: 135 Number of debtors: 1190 IFG year end figures – annualised from y.t.d. figures: T/O as @ end of 2007: £103m Number of clients: 155 Number of debtors: 577 T/O as @ end 2006: £79m Number of clients: 130 Number of debtors: 500 Company year end figures – annualised from y.t.d. figures T/O as @ end of 2007: £1.83b Number of clients: 220 domestic + 160 import T/O as @ end 2006: £1.76bn Number of clients: 220 domestic + 140 import. Jeff Longhurst Managing director
GMAC Commercial Finance As founder members of the International Factors Group since its inception in 1963, GMAC Commercial Finance (GMAC CF) is very proud of our association with the group and has been active participants over the years. GMAC CF has provided various board members, chairman and staff to its technical committees. Yvonne Wedel-Andersen and Martin Charman, who serve on the legal and IT committees respectively, are both GMAC CF’s representatives. In recent years GMAC CF has extended its membership with the addition of our USA company and Polish subsidiary. GMAC CF’s USA business is one of the few American factors within the group and offers a full range of import factoring services to several of the European members. We anticipate our Polish business will be commencing its international operations in early 2008. GMAC CF operates in the mature domestic factoring markets throughout the UK and the USA. The marketplace is highly competitive and growing market share poses a constant challenge. International factoring, both import and export, is expanding and we are pleased to be established providers in both environments. This reflects the support our industry provides to companies increasingly importing and exporting products on open account terms as the use of letters of credit continues to decline. At GMAC CF we operate and manage our international operations largely as one group under my personal supervision as its global head. I am strongly supported by Yvonne Wedel-Andersen in the UK, Abhinav Saigal in New York and Karen Chen in Hong Kong. In 2007 our International group will service in excess of $1bn in sales volume. We expect to see this volume grow in 2008, driven largely by the increasing level of exports from China to the USA and Europe. There is growing interest in the development of supply chain finance tools and GMAC CF will be introducing new products over the coming months to support these requirements. GMAC CF is an experienced and committed participant in the world of international factoring and is intent on continuing to grow its international business, playing a full part in the growth of our industry throughout the world. Ian Watson Director
Venture Finance A successful year-to-date, 2007, has proved extremely successful for the Venture Finance group. We have seen non-recourse turnover grow by 23% and funds in use increase by 18%. Client numbers have increased by 5% with new clients operating in a wide variety of sectors, from St Martin Vintners, an independent wine specialist and importer, to React Installations, a manufacturer of point-of-sale marketing products. This growth demonstrates Venture’s broad range of services and flexible offerings, and is testament to our commitment to work closely with clients and provide tailored solutions that maximise available finance. Perhaps the results are surprising given the well-documented problems in global financial markets. Even the most optimistic lender is now experiencing a “credit crunch”. But as traditional funding sources start to tighten their belts, independent financiers like Venture Finance have a real opportunity to support UK SMEs. These financial organisations often take a more individual approach to assessing a business’ eligibility for funding, and can plug gaps through more flexible finance packages, tailored to individual requirements. The overarching key to success for 2008 will lie in the range of services offered by lenders. Asset-based lending, trade finance and cashflow loans will continue to be offered and we expect to see a significant increase in the volume of cross-border financing. There will be a continuation of the process that has already started with the independents moving into areas previously regarded as the sole domain of the banker. To reap the rewards, financiers will need to branch out with a more comprehensive range of facilities to provide a full service that meets the ambitions and aspirations of clients. Tony Cox CEO
Vision Critical Tim Lodge, sales and marketing director of Vision Critical comments: “IFG has been a tremendous success for us and I really want to give them full credit for the valuable support that they and their members have shown us since we joined at the annual conference in Rio last year.” “The members collaborate seamlessly, pooling their global and local industry knowledge in the interests of each client. The knowledge, quality and reach of the IFG membership aligns perfectly with our thinking and culture at Vision Critical. As such, IFG forms a significant and integral part of our ambitious plans for international growth. “Fundamental to Vision Critical’s mission, “to be in every accounting package on a global scale”, the company has now commenced significant development with leading financiers in Europe. This knowledge and experience benefits the type and scope of transactions now being written by the key players in the UK. We look forward to a long and fruitful business relationship and to our involvement in IFG’s risk management seminar early next year.” He adds: “OSMO has extended the transformation of the asset-based lending industry in the UK to encompass Europe, providing lenders with greater visibility on multi-jurisdictional and multi-currency transactions, as well as the ability to offer higher levels of funding, driving down risk and operational costs. OSMO has been developed as a next generation, web services product specifically to allow borrowers to communicate electronically with any organisation with a mission-critical interest in a company¹s financial records. These include invoice discounters, factoring houses, auditors, outsourced credit management providers, reverse factors, stock finance providers and other asset-based lenders.” Tim Lodge Sales and marketing director
USA Bibby Financial Services – North America Bibby Financial Services – North America has seen tremendous growth in 2007. In 2006, we expanded our footprint into Canada (Toronto), opened a full service centre in Dallas, Texas, and a niche product division in Nashville, Tennessee, specialising in transportation funding, thus resulting in increased sales while maintaining steady growth in existing offices located in California and Illinois. We are expanding our regional presence by incorporating local client services centres, one of which recently opened in Phoenix, Arizona. The current economic credit crunch experienced this past year and in particular the last quarter of 2007, that is anticipated to go into 2008, has resulted in Bibby seeing larger financing facilities that would normally be funded by a bank or more traditional lender. As banks tighten up their credit criteria, Bibby has more opportunity for growth. However, for Bibby, this also means that we must take a closer look at our client’s customer’s credit strengths more closely as they may be affected by the current economic situation. Industries such as home builders and suppliers will be more difficult for us to work with as they could be heavily affected. As Bibby Financial Services has grown, we have expanded our personnel accordingly and are proud of the fact that all of our businesses have strong personnel within to promote to more key positions, and this is expected to continue as we go into next year. 2008 is anticipated to be another milestone year for Bibby Financial Services, as we become the alternative lender of choice when banks and more traditional lenders have to say no. As part of the Bibby Financial Services Group, we are a committed member of the IFG with five of our companies across our global network representing key trading regions now members: the UK, Poland, Czech Republic, India and North America. Our network complemented by our IFG membership now gives us a strong proposition to our clients in assisting them in their cross-border trading activities. Stewart Chester Chief operating officer |
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