Non - Banking Financial
Markets

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Factoring is one of the non-banking financial instrument that provide working capital and accelerate its cycle. This activity serves to allocating short-term financial rights arising from exportation. This sector includes local factoring and international factoring which is divided into: export factoring and import factoring. Factoring activity in Egypt is governed by a series of decisions issued by FRA’s Directors of the Authority based on what is stated in the Executive Regulations of the Investment Guarantees and Incentives Law No. 8 of 1997.

Factoring companies provide financing through the purchase of current and future financial rights arising from selling goods or providing services and paying cash. In general, factoring activity presents  many advantages for companies including:

1. Providing  the cash flow and financing needed by the business without having to wait until bills’ due date, where factoring companies provide a liquidity ratio of up to 80% of the value of the seller's financial rights.

2. Reducing the risk of bad debts.
3. Managing financial matters namely, collection services or follow-up management of  customer’s affairs or other services in order to reduce the administrative burden on companies thus, enhancing technical management and focus on business areas.

4. Facilitating access to foreign markets by providing warranty service.


In fact, the number of factoring companies reached 8 companies by the end of 2017. The value of factored securities increased from 6.1 billion EGP in 2016 to 9 billion EGP in 2017 with a growth rate of 47.5%.

Factoring market in Egypt is a promising market. The value of factored securities has almost tripled over the past four years, rising from 3.3 billion EGP in 2013 to 9 billion EGP in 2017. The value of factored securities also increased by 48% compared to last year where it was 21.5 billion EGP.