Neu-Isenburg, November 2024 – Numerous customers, partners, suppliers and a number of interested parties from Germany and abroad accepted our invitation to Neu-Isenburg and turned September 26 into a day of intensive exchange. The focus was on the question: How does factoring work internationally? And: What advantages in the form of features and new functions can we generate from this as a software provider? To this end, we invited several participants from four continents to share their views on the factoring industry with the audience. So it was a trip around the world in just a few hours, if you like.

 

The first speaker was the new FCI Secretary General Neal Harm. In his presentation, he emphasized that FCI sees itself first and foremost as a network that is available to all members worldwide. A network that pays off, as the figures for open account financing continue to rise. Factoring is still on the rise internationally, even if it has slowed down in the meantime. Companies are dependent on know-how, processes and partnerships in the context of cross-border trade financing. FCI has acted as an important link here for several decades and now has over 400 members in more than 90 countries. A real success story.

 

Another important player in the field of international factoring is the EBRD. As a traditional development bank, it is owned by a total of 72 countries. In his role as Senior Banker for the Trade Facilitation Program, Marco Nindl presented its various products. These include guarantees, liquidity support and the factoring/reverse factoring program. A total of EUR 2 billion has been invested in the latter since 2006, with eight countries currently involved. The EBRD works together with FCI to impart know-how in countries where international factoring is still largely unknown – for example through local conferences, seminars or training courses. In this respect, the EBRD is doing important development work to further promote the international factoring business.

An international all-round view

Several international guests were involved in the discussion: Nassourou Aminou from FCI (Africa), Pankaj Mundra from 360tf (India/MENA), Cristian Ionescu from Instant Factoring (Eastern Europe) and Mark Mandula from BCR (USA), moderated by Federico Avellán Borgmeyer from efcom. According to Pankaj Mundra, the future opportunities for factoring in India are very good as exports continue to grow. Germany is one of the largest importers. As one of four finance companies across India with cross-border factoring activities, 360tf’s aim is to help SMEs export goods around the world. Nassourou Aminou reports in his short article that Africa currently still has a small share of the global factoring volume. However, there is enormous potential in all the markets between South Africa and Tunisia, as well as Somalia and Senegal. This must be exploited, also thanks to the important preparatory work by the FCI, EBRD and IFC, for example.

 

In his presentation, Mark Mandula shed light on the factoring market in the US. The fact is that there are only three to four really large factoring companies in the barely regulated US market. Despite the size and importance of this market, factoring accounts for less than 0.5% of GDP (compared to approx. 12% in the EU)! The reasons for this vary and include the lack of awareness, trust, high costs and complexity.

The subsequent presentation by Federico Avellán Borgmeyer dealt with the topic of Islamic factoring. For some time now, efcom has been offering the product ifX, which focuses on the Sharia-compliant mapping of processes in factoring. In the course of our work on this topic, we realized that there is not just one way to meet Sharia requirements, but several correct ways. Our solution currently supports the following contracts: Wakalah Bi-Al Istithmar, Murabahah, Musharakah, Al-Kharaj bi-al-Daman, Bai Muajjal. Which markets are of interest here? Primarily Saudi Arabia and the UAE, but also other countries – for example in Africa – whose populations are partly Islamic. Even if Islamic factoring is currently still a niche product, it has great potential for the future.

 

Finally, Cristian Ionescu presented how the idea of the Instant Factoring platform emerged and what its focus is: small to very small companies that would otherwise have no access to the financial market. The platform’s activities in Romania, Serbia and now Spain show that the demand for such services is enormous – even if the total volume here is comparatively low.

 

Ultimately, the panelists agreed that education, training and education are important pillars of successful factoring business – in all those regions where it is not (yet) established.

From HR to eInvoicing to risk management

efcom has grown rapidly in recent years. This is one of the reasons why Stefanie Harkam is now in charge of recruiting and talent management. After an overview of all the new additions at efcom, the implementation of new HR software from Personio was described. The main keywords here are time and cost savings, employee self-service and personnel development. In operational recruiting, we are breaking new ground in order to be better perceived by younger target groups in particular. There are also innovations in onboarding and the design of benefits, such as the introduction of Workation. In our view, this is the only way to retain employees in the long term.

 

Katalin Kauzli implements eInvoicing systems for providers of financial services in her company PartnerHUB/Hungary. Why is this topic particularly topical right now? Around 80 countries worldwide have already introduced eInvoicing or are about to do so, which accounts for over 60% of the total global economic volume. One of the reasons for this is to close the VAT gap. In the EU, eInvoicing is to be mandatory in all member states from 2030 at the latest. For factoring companies, working with structured digital invoice data offers a major advantage, not least by enabling straight-through processing and the associated cost reduction. How can eInvoicing be used? Either by converting uploaded PDF invoices into the respective digital data format (example: ZUGFerD), directly from the invoicing system or via a tax authority. Finally, Katalin Kauzli showed examples of implementation from Hungary and India.

 

Stephan Kahlenberg from Willis Towers Watson has provided insights into the risk landscape in this country and beyond. In the past, premiums have generally been on a constant downward trend, while sales and cover capacities, on the other hand, have grown steadily. What has increasingly become the focus of risk assessment is the respective political (in)stability or the handling of the climate crisis. In this respect, political cover will continue to play an important role. In addition, the overall economic challenge is to reduce the number of insolvencies.

Use of AI in factoring

The product name CubX from efcom stands for “Customer behavior explorer”. Colleagues Federico Avellán Borgmeyer and Dr. Vinai Biju explained the idea behind it: using the vast amounts of data available from factoring processes to identify potential risks and opportunities. For example, predictions can be made about the volume of so-called “air invoices”. When developing and testing CubX, we were able to draw on anonymized customer data. Here we work completely transparently and in regular exchange with the customer concerned. The advantages for the customer are obvious: timely warnings about possible payment delays, strategic customer categorization, improved risk and cash flow management.

Legal perspective, project management, ef3/efX and efOnline

As part of the parallel workshops, the symposium participants were able to find out about existing case law on cross-border factoring, among other things. The presentation by Wolf Stumpf from Noerr highlighted potential hurdles and pitfalls, as well as interesting tips on drafting contracts. Ultimately, international factoring remains a complex topic, if only because we are talking about very different (supervisory) legal frameworks and regulations. All the more reason to seek advice in advance on the what and how.

 

In another workshop, efcom project management focused on the phases of collaboration with our customers. The participants were asked to arrange the project process from preparation to conception, implementation and testing through to operation itself using maps and then discuss it together. This contributed to an (even) better understanding of our processes and workflows in a vivid way.

 

We also reported on our ef3/efX and efOnline solutions and their highlights in 2024. If you are interested in more details, please contact our sales team, who will be happy to help you.