New Alpha Bank Factoring tools for small and medium liquidity

By Leonidas Stergiou

The operation of factoring is largely independent of bank lending. With less emphasis on the balance sheet of suppliers-companies and more emphasis on assessing the solvency of their buyers and each other on credit terms of trade, the factoring company forms the framework of cooperation with the customer.

As explained by executives of the factoring company Alpha Bank (ABC Factors), the access of small and medium-sized enterprises to this specific working capital service is easier, as they are financed based on their credited commercial transactions, instead of collateral usually covered by bank loans.

Protection against inflation

In the current context of the upward economic cycle that coexists with the increase in energy costs, raw material prices and transportation costs, factoring can serve as a solution to the increased liquidity needs, but, as Alpha executives add Bank, and a lever for the healthy growth of businesses in the following areas:

– Supporting through the discounting of receivables the increasing pricing in value.

– Providing the possibility of flexible payment terms of the markets, through the repayment of liabilities to the company’s suppliers (reverse factoring).

– Ensuring the liquidity of the company, both through the management and the coverage of the credit risk of the receivables.

Factoring has long supported the need for liquidity in the business cycle of businesses, especially small and medium-sized enterprises by discounting their trade receivables even in times of crisis. In addition, it provides value-added services such as the management and collection of receivables as well as the coverage of the credit risk of the buyers, the same sources add.

Alpha Bank’s strategy

In the context of the digital transformation of the Group, ABC Factors develops its technological infrastructure, achieving immediacy in the exchange and processing of data, further automating transactions with customers and their buyers. In this way, it offers the possibility of real-time transaction information, further improving the customer experience. The Group’s strategy through its subsidiary ABC Factors focuses on serving customer needs with flexible and innovative solutions. The company monitors the international market and adopts the evolution of factoring services in combination with the technological tools in the market of management and financing of commercial receivables.

Trends and the factoring market

The factoring market, both in Greece and in other European countries, was affected during the pandemic crisis, as the turnover of the companies in the sector represents the sales of the client companies to their buyers in the domestic and international market, which decreased due to restrictive measures to address the pandemic.

97% of the market turnover is realized by the subsidiaries of the four systemic banks. According to the data available to date by the Hellenic Factoring Association, in the first half of 2021, a significant growth of 14.8% was observed due to the gradual lifting of restrictive measures and the recovery of economic activity.

According to Alpha Bank Factoring executives, the channeling of low-cost liquidity by the Hellenic Development Bank through the banking system as well as other indirect support measures contributed to the reduction of the use of Factoring services and consequently affected the assets of the companies. As a result, the turnover of the Greek market showed in 2020 a decrease of 4% (lower than the European average, ie -5.4%) to 14.43 billion euros, as well as lower than the percentage (8.9%) decrease of GDP. The milder slowdown in GDP resulted in the Factoring penetration index improving as a percentage of GDP from 8% to 8.3%, however, falling short of the EU average. which is at the levels of 11-11.5%.