Factoring companies have reached sellers

Factoring companies, the competition between which has recently intensified, are entering a relatively new segment of small clients working on marketplaces—sellers. This is a wide range of potential clients, which is currently poorly covered by bank financing. However, it requires factoring companies to have developed IT solutions and non-standard approaches to ensuring operations, including to mitigate risks.

Given the dominance of large credit institutions in the factoring market and fierce competition, small players began to develop business in the direction of small and micro businesses. In particular, they are increasingly offering their services to marketplace sellers, so-called sellers.

At the end of November, for example, SDM-bank entered the segment. A little earlier, similar products began to be offered by ROVI Factoring Plus (ROWI trend, part of the QIWI group of companies), Papa Finance (a subsidiary of MigCredit, which deals with SME lending).

This is an actively growing area, which is also underfunded and with limited access to classic bank lending, experts say. Currently, there are 1.3 million registered sellers on the market, of which more than 400 thousand are active, Evgeniy Rodionov, co-founder of the fintech platform ROWI, estimates the segment.

But the demand for the services of factoring companies is unevenly distributed. Papa Finance notes that the demand for factoring is typical for sellers with a sales volume of more than 4–6 million rubles. per month and fast turnover of goods.

ROVY Factoring clarifies that the number of sellers with revenue of more than 1 million rubles. per month is about 40 thousand, and 6–7 thousand of them attract financing, but only 1 thousand sellers use factoring services. According to Evgeny Rodionov, “most of them are micro and small businesses, and for them today there is no wide range of financial products that take into account the specifics of the niche to finance turnover.”

Average financing receipts in the seller factoring segment are in the range of 2–8 million rubles. At the same time, according to some of Kommersant’s interlocutors, the rates for such clients are quite market rates, they can be 3 percentage points higher than the key rate (currently 15%), but at the same time a commission may be charged for the provision of such services. Papa Finance, for example, is ready to provide sellers with up to 20 million rubles. with deferred payment up to 120 days at a rate of 0.053% per day. SDM Bank requires security in the form of a guarantee from the company’s beneficiary.

However, working with such clients is difficult and risky, market participants admit. “In their contracts there is no deferred payment, there is no transfer of ownership of the goods to the debtor – all this carries certain risks for the factor that need to be leveled and this must be done in non-traditional ways for factoring,” explains Managing Director for Factoring at Alfa Bank Pavel Shishov.

In addition, when working with sellers, traditional assessment methods are not suitable: you need to take into account the history of interaction between the seller and the marketplace – the statistics of payments, purchases, returns and, to a lesser extent, the creditworthiness of the seller himself are important, he explains. “The factor must be able to work with pre-approved limits, closely integrate with the IT infrastructure of marketplaces, use EDI throughout the entire chain, know the specifics of contractual structures, taxation and accounting of transactions on marketplaces, etc.,” notes AFK executive director Dmitry Shevchenko.

Therefore, the largest players in the factoring market interact with marketplaces (according to the agent factoring scheme), and not with the seller directly. “This significantly reduces the factor’s labor costs for servicing the client base. To implement agent factoring, you need one client manager, and for classic factoring for 50 thousand sellers, the factor will need a very large staff,” explains Mr. Shishov. Every day, says SberFactoring CEO Igor Lysenko, up to 40 thousand payments are made to sellers on behalf of marketplaces.

Polina Trifonova