Back to Basics

What is the global state of the factoring industry, and how has it responded to the global economic crisis?

The global factoring industry, in stark contrast to the banking industry, has managed to pass through the crisis years very successfully. I believe that the basic elements of factoring—invoices and trade receivables—have been strong, and will remain so. The crisis presented an opportunity for factoring companies as businesses that were unable to obtain credit financing from banks found solutions amongst our products. Businesses can raise funds through factoring more easily by using their short-term receivables when it has been more difficult to access credit finance through banks. Factoring is a traditional way of financing for businesses, and more and more companies are going back to basics. The crisis offered an opportunity for a reshuffling of the finance industry, and factoring has benefitted greatly.

How would you assess the factoring industry in Turkey?

The factoring industry is relatively young in Turkey, having only been established around 20 years ago. We have seen a significant acceleration in growth in the last 10 years or so. In the last five years the sector began to be regulated by the banking watchdog (the Banking Regulation and Supervision Agency), which has taken the industry to the next level. There are now strict requirements for reporting and auditing as well as client selection and control. This is positively affecting the quality of factoring companies and helping to improve the image of the industry, and therefore attracting more clients to our services. Factoring industry turnover reached almost $50 billion in 2010. This figure is attributable to the aggregate volume of 60+ members of the National Factoring Association of Turkey, accounting for nearly 95% of the total factoring market here. The biggest growth continues to be driven from the domestic factoring business with a transaction volume of $44 billion, representing roughly 90% of industry volume. This is mainly due to a pick-up in economic activity and high growth rate in the country’s GDP.

How much importance does the government attach to factoring as a driver of the country’s economy?

Factoring is an important area of finance, and we are becoming a driver of trade and industry. The development of SMEs has been highlighted by the government as vital to the future growth of the economy. Our services are tailored to SMEs, and as we lend them support we are boosting the economy and helping to drive down the unemployment rate.

Garanti Factoring is a pioneer of the factoring industry in Turkey. What differentiates Garanti from its competitors?

Garanti Factoring is the oldest factoring company from the first years of the industry in Turkey. Garanti already has a strong brand and is fully committed to the industry, with services available across the country using Garanti Bank’ s vast local distribution channels and extensive branch network. However, the industry is still in its initial stages of development, and so the number of clients we have as an industry can be doubled every year for the next 5 to 10 years and still not be at a level seen in countries where factoring is more developed.

A lot has changed since the early days of Garanti Factoring. What is next for the company?

Garanti Factoring maintains its ongoing support to the real sector through its wide product suite and financial solutions to its customers, offering cash flow management through trade finance, secure sales through the credit protection of receivables, supply-chain finance both for domestic and international business, export and import products, as well as commercial collection management. With our unique innovative approach to the sector, Garanti Factoring aims to continue pioneering the offering of new initiatives in customer-driven products and solutions and making a change in the sector. The SME market is our top priority, and Garanti Factoring has successfully achieved its regional expansion of a strong sales force nationwide. Through close cooperation and synergies with the parent bank, Garanti Factoring capitalizes on Garanti Bank’s commercial banking expertise and client history. Garanti Factoring is the leading import factoring company in Turkey. We work hand-in-hand with Garanti Bank to provide our services wherever they are needed. Garanti Bank can also provide us with referrals when they identify suitable clients from its portfolio. This helps us create new leads in the market.

© The Business Year – March 2011