Factors Chain International global growth

Factors Chain International was established in 1968 to represent the interests of independent factoring companies around the world. With member companies offering domestic and international factoring services in countries across all five continents, Factors Chain International is by far the world’s largest factoring network. Member transactions represent more than 80% of the world’s international factoring volume.

When Factors Chain International was founded, domestic factoring services were only available in North America and a few European countries. At the time the idea of international factoring was new, yet Factors Chain International members could see its potential. They realised that they needed to do two things:

1. Introduce the concept of factoring into countries where the service was not available.
2. Develop a framework for international factoring that would allow factors in the country of both the exporter and importer to work closely together.

This framework has been built around the availability of local expertise and sensitivity to nationalcultures together with an understanding of the economic and commercial influences affecting each country.

Factors Chain International also believes that global alliances require flexibility. Members can maintain their preferred methods of operation as long as they are compatible with Factors Chain International’s standard methods of communication.

Membership in Factors Chain International is popular but an application to join does not automatically mean acceptance. Members must meet strict admission standards which apply to financial strength and an established reputation for quality and service.

Today factoring remains a global financing tool. Factors Chain International is a global network of leading factoring companies, whose common aim is to facilitate international trade through factoring and related financial services. They report that not surprisingly, the largest markets for import factoring are still the U.S.A. and a series of European Union countries where Factors Chain International is represented by all the local market leaders. Newer important markets for Factors Chain International import factoring are Taiwan, Japan, Hong Kong and China, illustrating that the international factoring concept has global application, covering more and more transactions in today’s trading environment where the letter of credit is being replaced by open payment terms.

Currently the Factors Chain International network counts 247 factors in 66 countries, actively engaged in more than 80% of the world's cross-border factoring volume. For the calendar year 2008, Factors Chain International volume of ‘international factoring’ grew with more than 22% to EUR 114.4 billion. Factoring is now universally accepted as vital to the financial needs of small and medium-sized businesses. It has the support of government offices and central banks throughout the world.

A growing number of companies offer factoring services and many of these work internationally.Most factors are either owned by, or associated with, well-known international banking or other financial institutions as well as insurance companies or industrial organisations.

Factoring is now universally accepted as vital to the financial needs of small and medium-sized businesses. It has the support of government offices and central banks throughout the world.

As international trade continues to increase, so too do the opportunities for the factoring industry.Because international factoring works in a similar way to domestic factoring, exporters have realised that it can help them to become more competitive in complex world markets.

Many businesses that turn to factoring companies are reassured that the industry is closely related to banking. Although factoring companies remain highly specialised institutions, nearly all major banks now have factoring subsidiaries. This has enabled the industry to promote its services with great success and to work for businesses of every size.

Factoring has become well established in developing countries as well as those that are highly industrialised. In various Asian countries, the growth of factoring has been dramatic while in Latin America, financial institutions continue to join the industry. Similar growth has occurred in Central Europe, the Baltics and the Middle East.

Today, almost every industry can profit from factoring. Textiles, clothing and (consumer) electronics are the most popular but manufacturers of industrial and farm equipment, office equipment and processed food are increasingly turning to factoring.

Factors Chain International members report that more service industries have become clients. There is also plenty of evidence to suggest that fast-growing, sales-driven organizations appreciate the improved cash flow, efficiency and profitability that factoring can offer.

Author: Toni Nicholson, factoringcompare.com, 02/03/2010