#DISCOVERFACTORING
How does FCI two-factor system work?

The greatest advantage of FCI is that it has a huge network of over 400 members with diverse experience in factoring and receivables finance which allows the possibility of accessing a whole array of services  from the same organization. Be it access to education, training, mentorship, two-factor system (through Edifactoring), information  exchange or business  opportunities. FCI is a one stop shop with some of the biggest names in the industry and it provides industry data and market intelligence.
One of our members, Egypt Factors, commenting on the greatest advantage of FCI membership said: “FCI provides continuous opportunity to meet, learn and do business with different industry stakeholders”. 

Kanayo Awani, Managing Director, Intra-African Trade Initiative, Afreximbank, Egypt

 

The biggest advantage of FCI is that we are a distinctive organisation. You won't find the equivalent anywhere. It is unique because it's so powerful and strong. We have so many members, almost 400 in more than 90 countries. All in all, we are a powerful organisation, what with edifactoring, the GRIF (General Rules for International Factoring), etc. There is no organisation that can possibly compete against this.

The second thing is the trading platform: edifactoring.com. The platform is a web-based solution for sending and receiving two-factor transactions as export and as import factor. The new edifactoring 2.0 that we are building for tomorrow will be novel to the world.

Third, you are business-minded and you enter into the community of receivables finance. This is a new way of looking at your business and becoming a real professional.

Fourth, education: you cannot become a member of the family and don't understand what the business is and how to deal with another partner. This is key and that is the key to the success of a proper factoring operation.

Patrick de Villepin, FCI Chairman

 

Standard Charted Bank joined FCI in 2009 and has built strong partnerships with several banks across Asia, Europe and the U.S. We started getting access to credit protection & credit collection services in geographies where we need support. Joining FCI has allowed us to enjoy thought leadership and mindshare with industry players. The annual FCI meeting is one event that we look forward to each year. It’s a great platform for us to exchange market information and to share out thoughts and views. We have had several great experiences with the FCI members whom we work with.

The most recent one that comes to mind happened in April 2020. Our client in Sri Lanka received a sizable order for surgical masks from a large US buyer. He was given a short timeline to confirm the order. We reached out to our key partner in Europe for the credit cover and were pleasantly surprised to get a positive answer from him in under a week, given the situation. That truly put us in a good position to win the customer. Such collaborative efforts to put customers at the centre of what we do from FCI members are not uncommon, but we especially appreciate it during trying times. We are certain that the strong working relationship with our partners will continue in the coming years.

Jessica Sim, Director, Receivables Finance, Global Product Management, Standard Chartered Bank, Singapore

 

FCI is a great organization. FCI is a big network in which you can have friends; you can have experience and knowledge. FCI is not only a business chain, with its business ethics and education activities; it is a global organization with 400 members in 94 countries.

Being a member of the world's biggest factoring association opens many doors to its members.

Cagatay Baydar, General Manager, TEB Faktoring, Turkey

By signing a factoring contract, clients do not lose their relationship with their customers abroad. On the contrary, it is a win-win tool. On the one hand, buyers can obtain better payment terms form their suppliers and keep on buying on open account terms while on the other hand, sellers can turn such receivables into immediate liquidity instead of waiting to cash them on due date. What’s more, with all the structure, sellers also benefit from 100% protection against bad debts and buyer insolvency.

Marina Azzara, Leader - International Factoring, Banco Supervielle, Argentina

 

During the opening-up process, factoring entered China in the late 1980s, and gradually developed into a well-established industry. In 2002, CEB joined FCI, becoming one of FCI’s first Chinese members, and taking the lead in international factoring among the Chinese peers. 

Today, FCI has 48 members in China, accounting for nearly 13% of total membership. Chinese banks and commercial factoring companies began to pay attention to big data, Fintech and Blockchain, and have refocused on rising supply chain finance and reverse factoring demand.

Wang Qian, Head of International Factoring, China Everbright Bank, China

 

During the annual meetings, there are also opportunities for us Japanese members to meet among ourselves. In 2016 in Cape Town, we discussed the current difficulty of sales promotion and agreed that cooperating with each other is currently the most important thing for the three Japanese Mega Banks.

I asked FCI’s Secretary General for cooperation towards holding an export factoring promotion conference in Tokyo, and he readily agreed. The three Japanese mega banks including us asked JETRO (Japan External Trade Organization) for assistance in attracting customers, and together, for the first time in 20 years, we held conferences organized by FCI in Japan. And not just in Tokyo, but in 2 other cities as well. We are sure that the conferences played an important role in increasing the publicity of export factoring.

Traditional international factoring starts when the exporter considers using export factoring. Acquiring new business is mainly the role of the export factor. It is necessary for the factor to undertake buyer's credit risk in order to realize the new business, but it is very difficult for the factor to take credit risk and collect payment when the buyer is located in a foreign country. Accordingly, it is necessary to find good import factors. Among FCI members, there are many factors in every region of the world who can undertake the import factor role, and export factors can request preliminary assessment to import factors easily by using FCI EDI system. In order to promote the success and development of international factoring, both intensive sales by export factors and active response by import factors are important.

Toshiyuki Hirata, Deputy General Manager, Mizuho Factors, Japan

In 52 years since its establishment, FCI has increased the volume of transactions with its members across challenges and opportunities. FCI has worked for the development of factoring, rules, and regulations of the factoring industry in every continent. Today, the global factoring industry reached nearly EUR 3 trillion in 2019.

FCI provides us an efficient platform to communicate within our membership effectively. Edifactoring is very user friendly, and it becomes more secure with a new technology of Blockchain. Similar to the swift system, edifactoring is a proven, secure, and reliable exchange.

As a legal infrastructure, the FCI offers us highly understandable, easy-to-apply legal rules, from international factoring rules, edifactoring, and correspondent relations.

Cagatay Baydar, General Manager, TEB Faktoring, Turkey

 

We decided 11 years ago to approach FCI to learn more on its professional offering and on how we could enhance our international services for our clients, by joining this community that today embraces around 400 members. It did not take us long to decide that by becoming an FCI member we were in the right path.

Marina Azzara, Leader - International Factoring, Banco Supervielle, Argentina

A long time ago, our export client company who exported merchandise to an American agent received a letter from US court which requested them to file its accounts receivable against this buyer as soon as possible because the importer had filed for chapter 11. The exporter was surprised at this letter because it didn't expect at all that the buyer was in such a serious situation and its remaining debt was substantially high. The exporter was not familiar with the process of chapter 11. But it was using our export factoring service, and therefore the import factor did all the necessary US court procedures in its behalf. All the exporter had to do is to submit the purchase order, invoices and a copy of proof of delivery to us. Yes, that's all. In the end, it was able to recover the full amount of the invoices.

An exporter was using export factoring on a non-notification basis as a substitute for credit insurance because it was easy to introduce without notifying the buyer. However, one of the managers of the exporter was critical, saying that even though payment performance is excellent, the commission rate for export factoring is high compared to trade insurances. Under those circumstances, a payment delay of more than 60 days occurred, so the exporter switched to notification factoring and notified the buyer. Then the import factor dunned the buyer. The buyer responded and payment was made soon afterwards. After that the exporter is using factoring on a notification basis. Right now payment is prompt, even during Covid-19 period. We think the import factors’ role in collecting payments is very useful and important.

Recently, many exporters who are using Cash in Advance or LC are requested from buyers to switch to TT deferred payment when they plan to increase sales to the importers. If the exporters do not accept this change, it is possible that they will lose business. In such cases we recommend the sellers to introduce export factoring. If a credit line is approved by a factor, the exporters can change to TT deferred payment by using export factoring. Furthermore, if the exporters would like to receive fund immediately they can use invoice discounting services offered by banks or the export factors. This is the feature of export factoring that we recommend the most for SMEs around the world.

Toshiyuki Hirata, Deputy General Manager, Mizuho Factors, Japan

One of the most powerful feedback was provided by Olympia Factors, a factoring company from Botswana that mentioned that: “Being associated with a global name like FCI gives Olympia Factors a brand identity which informs the market that our company is professional, and we are able to deliver as a world class factor”.

Kanayo Awani, Managing Director, Intra-African Trade Initiative, Afreximbank, Egypt

Recent months have been one of the most challenging times for businesses, as well as business leaders, across the world.

Heightened risk environment, liquidity, sustainability of business, supply chains and sales velocity, have all been impacted, unlike anything seen before.

In the Middle East region, factoring has allowed our clients to monetize their trapped receivables and helped them with liquidity issues during the crisis.

Many clients faced an adverse impact of lockdowns where their sales were impacted but they still had to pay for their working capital needs as well as overheads. Factoring, an apt solution, allowed them to stay competitive and assured liquidity.

For example, one of our clients, a large Hospital chain, had receivables from their insurance companies which were usually getting delayed. The suppliers on the other end wanted quicker payments, as their products were in-demand. This client used factoring as a working capital tool and helped them with upfront liquidity to meet their immediate working capital needs.

Factoring assisted our clients to better predict their supply chain and cash flows. It provided necessary credit cover to help them focus their resources and time to meet their business needs.

In tough credit times, features of cross border factoring that provides 100% bad debt protection against buyer risk, came in handy to continue to sell, on a secured basis.

Vijay Vashist, Group Head - Product Management, Transactions Banking, Emirates NBD

International Importer and Exporters

 
Click on this button if your business activities involve International trade, to see information about what is factoring, the industry, FCI two-factor systems and FCI education courses.

Factoring Company, Bank or Financial Institution

Click on this button if you are not yet a member, to see information about the benefits and advantages of joining FCI, including Industry information and FCI Academy.

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