Al Alaam Al Youm Newspaper
Ahmed Shaheen: Factoring is situated in a special position in the Egyptian market
Ahmed Shaheen, the general manager of Egypt factors stressed that factoring in Egypt is beginning to earn a significant place as a tool of financing projects and exports as well as collection of debts.
He added that this activity, which is growing exponentially in the whole world, has proved a tremendous potential for diversifying and integrating finance sources to serve enterprises.
He also said that factoring depends on financing companies that sell on deferred payment terms. The factoring companies buy the original commercial papers for collection from customers to ensure payment to the buyer 100% of the value of the invoice, thus providing the customer with a guarantee. He pointed out that the factoring also provides finance at 90% of the value of the invoice.
Shaheen added that factoring is different from banks. Factoring deals with companies doing business on open account terms whereas banks finance only large companies which adopt that system. It does not require guarantees either. Moreover, it can finance SMEs and traders. Moreover, factoring, he explained, can be with/ without the right of recourse to the seller. There is also another advantage in factoring: Approvals are fast, unlike banks which consider a certain production line and the company budget whereas factoring companies consider and follow up on the invoice foremost.
Shaheen asserted that Egypt Factors is the only company specialized in factoring in Egypt. However, there is another company specialized in exports factoring. He pointed out that Egypt Factors deals with all types of companies, industrial, services (such as tourist companies), food processing companies, and packaging companies. Yet it is difficult to deal with sectors where selling is not fully conducted such as contracting sector. The most important issue in this business is to continue cooperation between the seller and the buyer provided performance is done with quality, which is a condition precedent for dealing with the company. He added that it is expected that many companies would enter the factoring market in the coming period.