More than 15,000 businesses in Poland use factoring to protect themselves against the effects of payment bottlenecks. The scale of financing business activity on the basis of invoices is growing faster and faster. At the end of the first half of 2018, companies associated in the Polish Factors Association (PFA) achieved a turnover of PLN 109.5 billion, as much as 27.5% higher than in the previous year. The most frequently chosen form of financing by business entities is full factoring, which removes the risk of counterparty insolvency.
Factoring is a financial service that enables the negative effects of payment bottlenecks to be effectively and quickly addressed. Thanks to it, entrepreneurs can make current payments without any problems, despite long payment terms of invoices. Managers are increasingly aware of the benefits of this, which is why in recent years they have been more willing to resort to factoring.
The Polish Factors Association currently comprises the majority of entities providing such services. It has 27 members: 5 commercial banks and 22 specialised factoring providers. The Association also includes one entity with the status of a partner.
In the first half of 2018, over 15 thousand companies used the services of domestic factors. They issued 6.6 million invoices, on the basis of which factors provided financing.
“The number of businesses that use factoring is growing. Our service is simple compared to other forms of financing. Factors take over liabilities only on the basis of invoices. Currently, 15 thousand entities acquire funds for their operations in this way. Thanks to this, they can quickly satisfy the most urgent needs related to the payment of salaries and fulfilling duties towards the Treasury or the Social Insurance Institution. The noticeable strong growth in the number of clients served by the members of the PFA is also related to the fact that new entities are joining the association, offering financing for micro-entrepreneurs” – said Sebastian Grabek, President of the Executive Committee of the PFA.
Thanks to the growing recognition among business owners and financial managers, factoring remains the fastest growing financial service. In the first half of 2018, the companies associated in the Polish Factors Association achieved a turnover of PLN 109.5 billion, i.e. 27.5% more than in the previous year.
The most popular form of factoring is full factoring. It enables quick access to funds to finance current operations, combined with protection against the risk of non-payment by counterparties for goods or services provided. In the first half of 2018, PFA affiliated entities covered over PLN 54.5 billion of receivables, which accounts for almost 50% of the turnover. Another 35% is generated by incomplete factoring. Some. 15% is due to import factoring, reverse factoring and maturity factoring.
“Polish entrepreneurs are very knowledgeable and demanding customers. They do not use factoring only to benefit from a simple form of financing. They also expect protection against the risk of non-payment by their counterparties for goods or services provided, which is only offered by full factoring. In the event of unforeseen commercial difficulties, it protects entrepreneurs against the loss of liquidity and falling into the trap of payment blockages” – explained Sebastian Grabek.
Factoring services, by sector, are most frequently used by manufacturing and distribution companies. In their case, maintaining financial liquidity is of fundamental importance as it enables them to retain a strong competitive position.
“Factoring helps businesses to expand in the markets in which they operate. Obtaining financing for current operations in a situation where counterparties expect longer and longer payment terms for invoices has a double value for domestic manufacturers and service providers. In addition to converting receivables into cash, they also receive a tool to mitigate the risk of customers’ insolvency. We guarantee them financing of their current activities and security of trade turnover. We increase the liquidity of companies, which enables their stable development” – explained Sebastian Grabek.
