The factoring industry continued to stand by the exporter and more than 80 thousand customers, mostly SMEs, during the pandemic. In the first six months, transaction volume increased by 47% to 89 billion, and asset size increased by 43% to ₺52 billion.
Factoring, which is one of the financial instruments frequently used by SMEs, which constitute the lifeblood of the Turkish economy and provide high added value to the economy, is defined as the transfer of receivables arising from the sale of goods and services to a factoring company through assignment and the management of these receivables by the factoring company. Factoring offers three services, which can be classified as guarantee, collection and financing, together or separately, depending on the needs of the parties.
REDUCES TRADING RISK
Factoring, with the guarantee service it offers, undertakes the risk of non-payment due to financial reasons, guarantees the seller’s receivables arising from forward sales within the approved limit, and reduces the commercial risks of businesses. Thanks to the collection service it offers to its customers, the factoring company supports businesses in catching sustainable and secure growth opportunities by focusing on their own activities. The seller, who transfers his forward receivables to the factoring company, can use a certain percentage of these receivables as prepayment before their maturity. Thus, the conversion of receivables into cash is accelerated and the cash required for the growth of the business is obtained from the business’s own trade receivables without the need for any external source.
1 MILLION RISKY TRANSACTIONS BLOCKED
The factoring company is obliged to record invoices and similar receivable documents transferred to it by its customer, in the Central Invoice Recording System (MFKS). Among the duties undertaken by the Association of Financial Institutions (FKB) within the framework of the Financial Leasing, Factoring, Financing and Savings Financing Companies Law No. 6361, includes establishing the Central Invoice Recording System, where invoices and similar documents used in factoring transactions are recorded. Over one million risky transactions have been prevented so far, thanks to controls such as duplication and amount overruns made during registration in the MFKS, where all kinds of documents and information regarding receivables subject to factoring transactions are recorded.
WORKING CAPITAL SUPPORT TO SMEs
Supply Chain Finance is one of the leading factoring products that have increased their volume rapidly in recent years in the world and in Turkey. With Supply Chain Financing, supplier SMEs can pre-finance their trade at an affordable cost, without waiting for the maturity determined by the big buyers, benefiting from the creditworthiness of the buyers, without the need for additional collateral, providing themselves with resources for the production process and creating working capital.
Together with the developing technology and the digitalization vision of the industry, the Trade Chain Finance System (TZFS), which was implemented in 2019 under the umbrella of FKB, plays an important role in delivering both the trade chain finance product and other factoring products to large audiences. TZFS enables SMEs to access finance faster, safer and cheaper.
WITH 80 THOUSAND CUSTOMERS
The sector, which currently provides services with 54 factoring companies with approximately 350 branches and employs more than four thousand people, continued to be with the real sector, export companies and more than eighty thousand customers, mostly SMEs, during the Covid-19 pandemic. Factoring companies, which evaluate the receivables they take over as well as the companies they serve, have become the lifeline of production-oriented SMEs that have difficulty in accessing the financing source, enabling them to access cost-effective financing with their own commercial receivables without the need for any other collateral.
According to the semi-annual data of the sector for 2021, the factoring transaction volume reached ₺89 billion with an increase of 47% compared to the same period of the previous year, and the asset size reached ₺52 billion with an increase of 43%. In the sectoral distribution of factoring transactions, the first two rank is the service sector with 50% and the manufacturing sector with 47%.
33.4 MILLION DOCUMENTS IN MFKS
In MFKS, which works integrated with the Revenue Administration (GIB) e-document system and simultaneously confirms the accuracy of e-invoices and other e-documents from the Revenue Administration, The e-document rate, which was 23% in 2015 when it was founded, increased to 86% six years later. In addition, in the MFKS, where 5.5 million receivables documents amounting to ₺123.2 billion were entered in 2015, 33.4 million documents with a total amount of ₺1 trillion 53 billion were reached as of August 2021.
Source: Sabah / Translated by Irem Yildiz