1. International Factoring
Lee Kheng Leong
Asia Chapter Director

2. White Paper on Factoring by EUF
Factoring is a success story in Europe
Factoring is used primarily by SME
Factoring provides working capital to businesses that drive the true economy
The loss given default of factoring is low

3. Export factoring increases world trade
Study by WTO
Export factoring enables MSME to have access to international trade
10% increase in export factoring will increase world trade by 1%
During the FCI annual meeting in Cape Town, South Africa, the WTO made a presentation on factoring and world trade.
The presentation showed two very important findings:
Export factoring enables MSME to have access to international trade.
A 10 % increase in export factoring will increase world trade by 1%. This is a global figure and different countries will have different multiplier effect. It could be more in China.
This shows that export factoring is important for all countries.

4. Early Origins of Factoring, Savannah, Georgia 1870s
Modern Era of Factoring began in the U.S.
Early Origins of Factoring, Savannah, Georgia 1870s

5. Factoring... spreading its wings
USA
Europe Canada UK
Australia, South Africa
HK, Japan, Singapore,S. Korea
L. America, SE Asia, Turkey
E. Europe, China, India
MENA region
Sub Sahara Africa, South Asia
1870s
1950s
1960s
1970s
1980s
1990s
2000s
2010s

6. FCI Vision & Mission Statement
FCI Vision Statement
FCI”s Vision is to be the Global Association for the Open Account Receivables Finance Industry.
FCI Mission Statement
Receivables Finance is the core focus of the association and includes Factoring, Invoice Discounting and other Supply Chain Finance solutions.
FCI is the Global Voice for Open Account Receivables Finance:
facilitates and promotes International Factoring through a Correspondent Factoring platform.
supports the growth of the Industry and works jointly with policy makers and stakeholders worldwide
promotes best industry practices through education
publishes Information & Statistics about the Industry
endorses financial stability, the prevention of financial crime and respect of regulatory compliance and conduct

7. Power of FCI Network Promotion Advocacy Legal Education Compliance
FCISystem
Network
Two-Factor System
Advocacy
Global Statistics, Lobbying
Legal
Assignment, Notification, & Regulation
Compliance
Internal, KYC/AML, & Membership
Education
Product, Risk, Legal & Sales
Promotion
Industry, Government, Central Bank

8. FCI Correspondent Network
Access to Edifactoring.com, FCI’s platform for cross border factoring solutions
Proprietary platform that is accessed by our nearly 400 members in 90 countries
GRIF promulgated by FCI over its nearly 50 year history
In this 50 year period, only 5 cases have been brought to arbitration
Members have utilized the correspondent network to help solve working capital issues for their clients

9. FCI Global Factoring Statistics 2016 by Region
All figures given in Euro Billions
2015
2016
Group rate
% change
Europe
1,557.0
1,595.1
+2.5%
Asia
563.0
479.1
-14.9%
Americas
187.4
205.0
+9.4%
Africa
18.7
27.6
+47.6%
Australasia
41.7
47.7
+14.1%
Total
2,367.8
2,354.5
-0.6%

10. Global Factoring Volume 1996 - 2016
20 year CAGR = 9%
Global factoring grow on a CAGR basis over the 20 year period by 11%. International cross border increased over the same period by

11. Comparison to other forms of Trade Finance
Factoring, LC & Credit Insurance Comparisons with World Exports (USD Millions)
2011
2012
2013
2014
2015
2016
CAGR
X border factoring
355,379
467,860
555,879
588,185
579,552
550,107
9.2%
Credit insurance
1,495,227
1,538,609
1,630,925
1,709,579
1,586,000
1,615,000
1.7%
Letters or credit (LC)
2,806,965
2,854,918
3,125,957
3,044,682
3,014,235
3,044,375
1.6%
Total world exports
17,816,372
18,378,730
18,935,210
18,432,650
16,943,000
-1.0%
Sources:
Factoring figures reported by FCI. World Factoring includes both domestic and cross border factoring volume
Short and medium term sovereign credit insurance figures reported by the Berne Union (2016 estimated)
The LC figures from ICC/SWIFT study. Swift does not release LC issuance data, but in December 2010 its board agreed to carry out a ‘trade snapshot’, releasing the number of MT700 commercial standby and guarantee messages, including average invoice size. All figures are estimates based on actual data (2016 estimated)
The world merchandise export figures from the WTO in US dollar value (2016 estimated)
Despite the growth in world trade in 2015, world merchandise exports in dollar value declined by 14 percent in 2015, to US16 Trillion.
There is a strong need for open account trade, if we look at this slide we see that although the long predicted decline of the Letter of Credit - which is time consuming, paper intensive and expensive – this instrument has proved its value in mitigating the risk involved and giving access to liquidity in a difficult economic environment. However if we compare L/C with factoring, we notice that cross border factoring growth has been constant and substantial in the last 5 years and its growth is a clear indication of what the trend will be in the next few years.
Today, with 79 member companies from around the world as members of the Berne Union and the Prague Club, we have grown to be the leading global organisation for the export credit and investment insurance industry.
In 2014, members of the Berne Union collectively insured USD 1.9 trillion of exports and foreign direct investment – more than 10 percent of international trade, and indemnified USD 4.6 billion to exporters and investors, protecting them from losses suffered due to buyer defaults in all regions of the world.
ST Insurance actually declined in 2014 (based on credit limits) by 4%, first decline since the start of the great recession!

12. Domestic versus International Volume

13. Asia Factoring Statistics
Asia declined by XX %, greatly led by the influence of a very challenging Chinese environment, dropping over 25%. This was followed by Taiwan, which delinked 10% and Japan, declining 9%. On the contrary, HK grew by 28% and Singapore by 4%. Also positive growth figures were reported in Malaysia, Thaliand and Vietnam.
YOY
-25.00%
-8.71%
-10.45%
4.11%
27.68%
7.43%
-12.90%
5-Y CAGR
-5.08%
-2.77%
-7.66%
36.11%
8.20%
18.57%
-3.26%
* Data from FCI World Factoring Statistics 2017

14. FCI members in India
SBI Global Factors Limited
IFCI Factors Ltd
SCB
DBS Bank
ECGC Limited
India Factoring& Finance Solution Pvt Ltd
Yes Bank Limited
ICICI Bank
Blend Financial Services Ltd
Genpact India

15. India the future Giant
Of factoring in Asia