SME Finance Forum's study visit to FCIFriday 15 November 2019
During the annual flagship event Global SME Finance Forum 2019 held in October, the SME Finance Forum organized 10 study visits, including one to FCI, which is an umbrella organization for independent factoring companies around the world. Founded in 1968, FCI introduced factoring in countries where it was not yet available, and they also developed a framework for international factoring that would allow factoring companies in both the country of the exporter and the importer to work more closely together.
During the visit, FCI introduced the audience to international and domestic indicators of global factoring, showing that in a period of 20 years, the compound annual growth rate equaled 10%, reaching more than 2,500 billion euros, from which FCI had a total of 6,5% of the global market share. In a comparison to other forms of trade finance with world exports from 2011 to 2018, global factoring accounted for more than US$ 3,1 million with a growth rate of 2,5%. Source: FCI Statistics.
As per a World Trade Organization (WTO) study mentioned during the presentation, factoring has a strong positive effect in allowing SMEs to access international trade. Factoring in fact, is a true determinant of the world trade: for every 10% increase in factoring available, this leads to a 1% increase in real trade flows, mostly exports. It also showed that there is a strong but casual link between factoring and SMEs trade on a macro level, highlighting the important role of factoring in supply chains. Trade finance, in particular factoring, matters!
Power of FCI and cross border open account receivables finance
Today, FCI has grown into the world's representative factoring network and association with close to 400 members in 90 countries, and six regional chapters. Open account receivables finance solutions are becoming more important to their business as there is a strong competitive environment with better communications, more information and better payment terms available. According FCI, factoring offers benefits to all the stakeholders in the supply chain: sellers (both SMEs and large corporates), buyers and banks. FCI offers several products including edifactoring.com, a Two-Factor business both as Export and Import Factor (import/export factoring exchange), FCIreverse a reverse factoring full operating platform that allows SCF cross-border collaboratives schemes, and Islamic international factoring (Sharia compliant). FCI also discussed some of the risks in factoring, and they provide educational tools through their Centre of Knowledge for Receivables Finances, which is available to all FCI’s stakeholders.
Herman Annink, Chair of Compliance Committee talked about the importance and the role of compliance in factoring, pointing out that the core concept of the financial industry and international trade is based on “trust”, and he is “proud that FCI is considered a trustworthy, professional party in the financial community and international supply and delivery”. Specifically, he drew the attention to compliance and integrity risk management as being a strong business qualifier.
At the end of the visit, Betul Kurtulus, Regional Director for Central, Eastern and South Eastern Europe and the Middle East for FCI, highlighted that “success is having a comprehensive plan, continuous development and implementation, and talented people working together. In the FCI family, every day, we work for our community, to make their business experience a little bit better, productive and successful.”
Finally, the Global SME Finance Forum 2019 was a great event and the study tour was quite special, great group of people and all eager to learn about our industry.