On this International Education Day, we look at the impact that education has on our industry and its importance in today’s world. It is a no-brainer that in life, the more one is educated, the more one can accomplish, and the more one is successful; well, this is the same in business. The more people and companies are educated in factoring and receivables finance, the better the industry does as a whole, and the more adaptable a company is for anything that may disrupt the ‘norm’.
Factoring has been around for centuries; evidence of a rudimentary form of factoring was found over 5,000 years ago in ancient Mesopotamia. Not long after that, in ancient Egypt and Greece, debts were acknowledged in writing and recorded on papyrus. But it wasn’t until the Roman era when the first debt collection specialists appeared, they received a commission of up to 1% of the money collected from the debtor. The Romans spread that concept throughout Europe as their Empire grew(1). The more companies heard of this new form of finance and learnt about its inner workings and structure, the bigger the industry grew. Today, factoring has adapted to modern life. It is based on the concept of selling (and/or assigning) a business’s outstanding receivables (=sales invoices) to the Factor and receiving a set of trade-related services, which now includes:
- Protection against bad debts
- Collection of receivables
- Financing
- Receivables ledger administration
The Factor will include Sales Ledger Management and Collection services. These may be fully outsourced to the Factor or may be kept in-house by the Seller, depending on the particular product offered. For an SME, the opportunity to outsource its collection activity and manage the ledgers can be a very valuable benefit. For larger companies with developed and dedicated accounts departments, the collection and ledger monitoring and management activity can more easily be kept in-house.
In 2021, 15.71% of global trade was held by Factoring, with a volume of over €3,093 billion in 2021(2). This is only increasing; 2021 showed a +13.46% growth compared to 2020, and proves how if you don’t understand Factoring and Receivables Finance, you are missing a growing market. If we look at the impact that Covid-19 had on global trade, if companies were not educated on Factoring, they would not have been able to adapt so quickly. Many companies, as showed by the growth last year, turned to factoring to improve working capital, and thus proves when a company has well-educated employees, they can adapt and only benefit the company. We asked a few of our Executives for their thoughts on the importance of education; this is what they had to say.
“Education is the key for success - Life is a constant learning process in a continuously changing environment filled with opportunities and threats for individuals and businesses. Education is the key moving beyond fear of the unknown in social and business Life, as a process of experience reconstruction paired with proper skills and knowledge to deliver success and growth. In other words, Education, in all aspects of Life, is widely identified as the great engine of personal and corporate development. In FCI, Education is always a strategic priority, as a Core function providing a great variety of product offerings, designed to meet the business needs of its members and delivered by the FCI Academy for those - members or not- who are engaged in Factoring, Trade Receivables and Payables Financing and the broader Supply Chain B2B Transactions. Education is of paramount importance for any further growth, and FCI, as a leading global Association, will continue to focus and invest all of its energy on building the new digital future and proceed in tailor made solutions and proper training for our Industry.” - Mr Panos Papatheodorou, FCI Education Committee Chairman & Head of Investment Committee at R.E.F. Real Economy Fund AIF V.C.I.C. Ltd.
“More than ever, the importance of having skilled and well-educated resources has considerably increased. People have to face a completely new environment and, therefore, it is fundamental to provide them with suitable knowledge of their business to increase their confidence in dealing with the new challenges that have arisen. Education is a key element for the growth of our industry, and as such, it remains a top priority for FCI. We will continue to invest in Education to support members and the entire industry worldwide.“ - Ms Daniela Bonzanini, FCI Chairman.
“Education is the lifeblood of any organization to achieve success. Excellence is not accidental but is achieved through knowledge, fortitude, and perseverance. However, many take education for granted. Like all matters, education is a choice, but those who choose to abandon education do so at their own peril. As Aristotle once said, “choice, not chance, determines your destiny.” - Mr Peter Mulroy, FCI Secretary General.
“Education is fundamental for everybody to improve the quality of life, which is very important for the society as well and the companies operating therein to achieve their goals more easily, faster, and safer. Education has been named as one of the main pillars of FCI for more than 50 years. Since the early years of its foundation, FCI’s mandate has been to spread knowledge, educate the industry, and develop best practices in domestic and international factoring and related open account finance products. In early years there was no accumulated knowledge of factoring almost in all countries. Today FCI continues to hold the mission of spreading the knowledge to developing and emerging markets and to share experience and best practice with all stakeholders.” - Ms Aysen Cetintas, FCI Education Director.
“The remarkable growth of our industry during the last 20 years has been lead from all the knowledgeable professionals who believed in the direct benefits of Factoring & related products but also invested in education. FCI Academy has been the strategic education partner for all industry’s experts, having trained more than 20,000 of them from 90 countries, who trusted us in supporting capacity building at all hierarchical levels in their organizations. This trust is our strength to continue offering the required expertise & knowledge, using all modern, “high learning impact” methods, constantly adjusting to the rapidly changing demands of our industry.“ - Mr Spyros Tsolis, FCI Deputy Education Director.
So, on this International Education Day, we urge companies to invest in their future, by investing in educating their staff.
If you are interested in finding out how FCI can help educate your staff, visit www.fci.nl/academy to discover the FCI Academy and its wide educational offerings.
References:
- “What is the history of factoring?” written by TFG https://www.tradefinanceglobal.com/posts/what-is-the-history-of-factoring/
- “FCI World Factoring Statistics reports the largest double digit increase in volume in over two decades”, written by FCI https://fci.nl/news/press-release-fci-world-factoring-statistics-reports-largest-double-digit-increase-volume-over