2020 in factoring under the sign of pandemic

As we began 2020, no one expected the occurrence of things that have actually affected not only the factoring market, but every area of our lives. Financial institutions also reacted by tightening the criteria for granting working capital loans, investment loans or other sources of financing.

Factoring in 2020 had many different faces. While the beginning of the year did not herald "problems", the end of Q1 2020 showed how uncertainty among entrepreneurs and the subsequent lockdowns affected the factoring market. The revival came in the third and fourth quarter and thanks to that, in Poland, despite these unfavourable conditions, the interest among entrepreneurs who use the service remained at a high level. While "the world" recorded a decrease, in Poland the turnover increased.

Although the growth was lower than in previous years, as it amounted to about 3%, looking at the global market, we can say that this result should be considered a success. On the biggest factoring markets the decrease reached even a dozen or so percent.

An interesting change took place in the factoring turnover structure by type. For the first time in several years, recourse factoring accounted for the majority of the factoring turnover in Poland.

The reason seems to be the increasingly restrictive criteria for the allocation of limits by insurance companies. In this case, the uncertainty associated with the pandemic certainly did not favour non-recourse factoring (with assumption of risk), which still prevailed over partial factoring in 2019.

The industry was also not helped by government assistance in the form of the anti-crisis shield. Many companies received a large injection of cash. Many companies took advantage of this aid in various ways, e.g. by repaying loans taken from banks or factoring limits. This is illusory, as the shields will have to be returned in smaller or larger amounts and then the search for financial liquidity will begin anew, while the banks' stricter criteria for granting financing and, in the case of many companies, weaker financial data caused by the pandemic, will not make things easier.

To sum up, almost 18.5 thousand companies benefited from factoring in Poland which shows that factoring "defended" itself from the pandemic. Factors associated in the Polish Factors Association financed over 290 billion PLN of receivables which ranks 8th on the European market.

Source: Polish Factors Association

Factoring Product Manager at Comarch