Al Ahram Newspaper
1st Conference on Factoring as a Tool to Finance Small and Medium Enterprises Starts Today in Cairo
Al-Ahram, 10 January 2010
The first conference on factoring as one of the finance tools that spread all over the world fifty years ago and in more than 70 countries starts today in Cairo for three days. With a turnover of 1.3 trillion Euros worldwide, it is considered one of the most significant, fastest growing, financial tool that support small and medium enterprises. This financial activity has started recently in Egypt within the framework of the government’s effort to develop of the small and medium enterprises sector.
Egypt Factors, one of the first companies to start this activity, will organize the conference which will be attended by an elite group of international experts in the factoring business. The company is a joint financial institution comprising the Commercial International Bank (CIB) in Egypt, Europe Bank [sic], with a stake of 40% each. The remaining 20% belongs to the International Finance Corporation. It is considered the first financial corporation to be specialized in factoring in Egypt, being first company in the General Authority for Investment and Free Zones to register as a factoring companies.
With a special focus on small and medium enterprises, factoring companies provide an integrated set of factoring services (with or without right of recourse to the seller) to various companies which sell or buy on credit terms.
These services include administration and collection. A factoring company collects invoices and trade receivables from buyers when they fall due. Thus, this service allows clients to focus their efforts on production and marketing while factoring companies takes up professional collection with buyers.
In addition, they provide protection from bad debts as they guarantee collection of covered invoices from buyers, and settle unpaid, undisputed invoices in a short time after they fall due. This service helps their clients grow and expand their sales, assured that they will not suffer losses due to defaulting buyers.
Moreover, such companies, new comers as they are to the Egyptian market, provide finance service. Namely, they pay in advance up to 90% of receivables and purchased commercial papers, with the remainder to be paid upon settlement of the invoice.
This service provides clients with instant cash flow and turns their sales on open account terms to cash sales, thus increasing the rate of turnover, and doubling their sales.