After a drop of 9% in the first half of last year, Romania’s factoring market started to recover in the second half and thus reached EUR 2.7 billion at end-2014, a level similar to the one registered the year before. In 2013, the factoring market decreased by 6% year-on-year.

“The results registered in the first half of 2014 due to lack of investments and development/infrastructure projects have triggered us to forecast a market contraction of 10% for the entire year. The market recovered greatly in the last six months and reached the same level as in 2013, confirming stabilization in the market,” said Bogdan Rosu, president of the Romanian Factoring Association ARF.

The growing trend was mainly recorded due to increased consumption in the second half of the year and a positive evolution of the industrial sector. The internal factoring in FMGC area had a 15.15% share in the total, up from 12% in 2012 and 2013.

“Construction remains the sector that managed to finance itself the most via internal factoring, holding a share of 23.82% of total operations, significantly lower than the 32.8% registered in 2013, confirming the low level of investments and project carried out last week,” said Rosu.

The lowest percentage of financing via internal factoring was registered by the pharma sector – 2.5%. Significant increases were registered in metals & chemicals & recycling – 8.72% in 2014, up from 4.72% in 2013, and transports – 7.58% last year, compared to 6.2% in 2013.

The largest volumes carried out by factoring in 2014 come from big companies with turnovers of over EUR 50 million – 43.30%, followed by companies with businesses between EUR 5 million and EUR 50 million – 36.40%and companies with turnovers below EUR 5 million – 20.30%.

ARF evaluated the trends on the factoring market based on data provided by members of the association. Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable, such as invoices, to a third party -called a factor- at a discount.

Irina Popescu, irina.popescu@romania-insider.com