Factoring companies are looking for new clients among subsidiaries of large holdings

Factoring companies are looking for new active clients among the subsidiaries of large holdings and in industries where the level of penetration of the tool is still low. These are, for example, IT, logistics and cargo transportation, online trading and sellers, agriculture. However, a significant proportion of companies in these sectors belong to small and medium-sized businesses (SMEs), which are afraid to use the tool in order not to lose their status.

According to the Association of Factoring Companies (AFC), in the first quarter the factoring market showed a traditional seasonal decline – by 5.5%, to 2.13 trillion rubles, but year on year there was an increase of 56.8%. According to AFK estimates for 2023, 86% of the factoring market is accounted for by manufacturing, mining and wholesale trade.

“Factors actively work with large and major companies. But there are few clients of this scale, and most of them have identified a pool of partners. As a result, there is a struggle for the so-called skirts of holdings – subsidiaries of the largest holdings, which are now also starting to try factoring solutions,” notes Managing Director for Factoring at Alfa Bank Pavel Shishov.

It is in such companies engaged in logistics, IT technologies, mechanical engineering, and consulting services that now see the greatest prospects for factoring penetration, since many have not used the tool before, agrees Stanislav Danysh, Chairman of the Board of Ingosstrakh Bank.

“Factors have focused their efforts on providing liquidity to logisticians from medium-sized businesses, while the majority of the market is still small business, which looks like a promising area,” adds Pavel Shishov.

Working with SMEs makes it possible to maintain the level of margins and develop technological effectiveness due to the sector’s high adaptability to changes and its desire to use innovative solutions that increase efficiency, says Innokenty Volovik, managing director for factoring at PSB.

“Factoring can be called scarce in the lower quartile of large businesses and in the upper quartile of medium-sized businesses,” clarifies AFK executive director Dmitry Shevchenko. “But this is a shortage not of supply, but of demand – companies in the SME segment that work in factoring today are increasingly less likely to strive to become large . They are not ready for an increase in the tax burden and attention from regulatory authorities. There are known cases when, through the use of factoring, a client was able to increase revenue above the limit values ​​for SMEs; as a result, the Federal Tax Service excluded him from the register of such entities, which created problems when receiving government support measures.”

Agriculture remains one of the most undervalued and promising areas, notes General Director of VTB Factoring Igor Vnukov. At the end of 2023, the industry’s factoring portfolio amounted to RUB 13.5 billion. and barely reached 0.7% of the total. The annual dynamics are also modest – an increase of 12% compared to 57% on average for the market, as follows from AFK materials.

The main reason is government subsidization of lending rates, which reduces the attractiveness of factoring in the agricultural sector, explains Mr. Vnukov. In his opinion, more than 60% of agricultural loans are short-term and “all other things being equal, can be replaced by factoring.” Igor Vnukov estimates the growth potential of the tool in the industry by five to seven times, up to 70–90 billion rubles.

International factoring also has prospects, says Sberfactoring CEO Igor Lysenko. “This is due to the construction of new supply chains, import substitution and the desire of factors to work with the entire chain – from production to sale of goods,” he says. The interest of factors in financing imports from China is gaining momentum, confirms Pavel Shishov. But so far, export factoring accounts for only a little more than 1% of the market – 24.3 billion rubles. based on the results of the first quarter.

Polina Trifonova