Romania’s factoring market has seen significant growth, increasing by 12.8 percent year-on-year in 2012 to reach a new record level of almost EUR 3 billion. The news follows a recent announcement from local bank BCR that its own factoring business had posted huge gains in 2012 and comes from Romania’s Factoring Association (ARF), which has completed its third year of monitoring the local market.
The ARF’s survey shows that domestic factoring operations were up by 16.14 percent last year, while import factoring operations climbed more sharply – by 23.5 percent. Export factoring on the other hand stayed at a similar level to the previous year. “Rises in each year show that factoring has become increasingly better known and more accessible to companies in diverse industries,” said ARF President Bogdan Roșu. He added that last year, banks and organizations offering factoring services increased the levels of staff directly concerned with factoring by 10 percent.
Sector by sector, construction provided the largest share of the domestic factoring market – 28.1 percent of total receivables purchased by factoring operations. Companies in metals, chemicals and recycling ranked second with a 14.7 percent share, followed by consumer goods firms – 12.5 percent. Just behind was the automotive industry (12.3 percent), while agriculture and food ranked fifth with a share of 10.6 percent, according to ARF. For export factoring, metals, chemicals and recycling firms accounted for over 50 percent of the total market.
“We remain optimistic about the development of this product in our country and its contribution to economic recovery and consolidation in the coming years. Attracting new foreign investment must remain the top priority, and in this context, EU funds are one of the most important and reliable sources of money,” said Bogdan Roșu. The ARF expects the factoring market to continue growing in 2013, but warns of increased risks with more companies expected to have trouble meeting payment commitments and a predicted increase in fraud.
The ARF includes many of Romania’s major banks and financial services companies, such as BCR, BRD, Banca Transilvania, IFN Next Capital Finance, ING Commercial Finance, IFN SA RBS Bank (Romania) Raiffeisen Bank, UniCredit Tiriac Bank and IFN Access Financial Services.
Factoring is a financial transaction in which a business sells its accounts receivables, such as invoices, to a third party -called a factor- at a discount.