2. CONNECT. EDUCATE. INFLUENCE. Factoring Key Figures & Trends Erik Timmermans, rep. Secretary General IFG G-Nexid Workshop, Geneva 28 March 2014

3. CONNECT. EDUCATE. INFLUENCE. What is Factoring / Commercial Finance? General definition: A range of working capital solutions designed to provide day to day operating business finance for commercial organisations Basic definition: Provides cash against customer invoices Descriptive definition: Factoring may include: Sales Ledger Administration Collection Credit Insurance

4. CONNECT. EDUCATE. INFLUENCE. Why is this industry important? Support for (in particular SME) business to develop and grow Support for export development Creating and supporting employment Efficient economic growth

5. CONNECT. EDUCATE. INFLUENCE. Average Client Turnover, Europe

6. CONNECT. EDUCATE. INFLUENCE. Evolution of World Factoring Turnover 1980 : +/- 50 billion 1990 : +/- 200 billion 2000 : +/- 600 billion 2012 : +/- 2.120 billion The industry has grown 4 times faster than the World economy over the last 30 years…

7. CONNECT. EDUCATE. INFLUENCE. Total World: 2.119 billion (+8%) Factoring in the World 2012 Source: IFG GIAR 2012 North America 91 (4%) North America 91 (4%) Europe 1.257 (59%) (1.173 EU) Europe 1.257 (59%) (1.173 EU) Africa & Middle East 32 (2%) Africa & Middle East 32 (2%) Asia 581 (28%) Asia 581 (28%) Australia & NZ 64 (3%) Australia & NZ 64 (3%) South America 93 (4%) South America 93 (4%)

8. CONNECT. EDUCATE. INFLUENCE. Key Industry Figures Turnover 2012 : 2.119 billion + 8 % compared to 2011 Approximately 2.700 factoring companies But 1.200 in USA and over 500 in Brazil… Financed amount at year end : 309 billion Factoring Clients : 496.000 Factoring Debtors : 13.500.000 (rough estimate) Employees : 46.000

9. CONNECT. EDUCATE. INFLUENCE. Market Shares 2012 (GIAR IFG) Total in Mio Market Share China 343.75916,2 % UK and Ireland 311.15614,7 % France186.4948,8 % Italy181.8788.6 % Germany157.4247,4 % Spain124.0365,9 % Japan98.1004,6 % USA80.0003,8 % Taiwan70.0003,3 % Australia63.2913,0 %

10. CONNECT. EDUCATE. INFLUENCE. Market Structure Concentration : Combined market share of 5 biggest factoring companies in each country On average 84% Bank dominated: Combined market share of Top 5 in each country 49 % : bank subsidiaries 44 % : bank divisions

11. CONNECT. EDUCATE. INFLUENCE. International Factoring Support of SMEs in open account trade

12. CONNECT. EDUCATE. INFLUENCE. International Factoring 62% of World Factoring turnover is reported as Domestic Factoring Cross-border factoring continues to grow more rapidly than domestic factoring Either Direct Export Factoring (Factoring Company deals itself with foreign buyers) Or Two-Factor system (Export Factor uses services of Import Factor in buyers country)

13. CONNECT. EDUCATE. INFLUENCE. The Two-Factor System IF exchange: Electronic exchange between factors Credit protection & Collection by Import Factor Export Factor Import Factor Invoice collection and debtor credit approvals Delivery of goods & services Factoring agreement: Prepayment of invoices/ credit management DebtorSupplier

14. CONNECT. EDUCATE. INFLUENCE. Benefits of the two-factor system for the Exporter 100% protection against the buyers inability to pay on 90 days past due. Increased sales in foreign markets by offering competitive terms and conditions of payment. Credit lines are in place for buyers, which speed up response time for orders and re- orders. Accelerated cash flow through faster collections. Elimination of time-consuming administrative burden or delays linked with the negotiation of Letters of Credit.

15. CONNECT. EDUCATE. INFLUENCE. Benefits to the Buyer Purchase on convenient Open Account terms. Expanded purchasing power without using existing credit lines. Orders can be placed swiftly without incurring the delays, complications and cost of opening Letters of Credit. No additional commission for buyers.

16. CONNECT. EDUCATE. INFLUENCE. Role of IFG

17. CONNECT. EDUCATE. INFLUENCE. Started in 1963 Members in more than 60 countries Representing the Commercial Finance Industry worldwide (Factoring, Invoice Finance, Asset Based Lending) IFG

18. CONNECT. EDUCATE. INFLUENCE. Creating Business Opportunities for Members through Two- Factor platform and other cross-border business solutions. Global association but regional approach through Chapters (Asia, Latin America, Africa, Central East Europe) Partnering with like-minded associations (CFA USA, ADFIAP, national associations…) and international organizations (EBRD, EIF, CFEC, …) Connect members with specialized service providers (IT, Legal, Risk, Consulting…) Connect

19. CONNECT. EDUCATE. INFLUENCE. Developing Talent in Factoring Industry E-learning in different languages University certificated Course on Finance International Trade & Commercial Finance Leadership Business game Mentoring and Consulting Educate

20. CONNECT. EDUCATE. INFLUENCE. Research and Statistics Center Access to networking & Learning Defending the industry with policy makers : EU Federation for Factoring & Commercial Finance Co-operation with CFA for harmonization Draft Model Law on Factoring Influence

21. CONNECT. EDUCATE. INFLUENCE. Thank you for your attention! Questions? More info on www.ifgroup.com