FCI and IFG tie the merger knot to create the voice of the invoice in factoring

News | 15 January 2016

FCI.IFG web.jpg

Further to the announcement in October 2015 that Factors Chain International (FCI) and International Factors Group (IFG) had agreed to merge, the two bodies have now completed their union with the combined organisation in the form of FCI+.

With effect from 1 January 2016, the new organisation – enshrined in one legal framework –  now represents more than 400 institutions in over 90 markets worldwide. The combined annual turnover of the enlarged network represents 75%n (1.7trn) of the total volumes of the factoring industry (2.3trn) and 90% of cross-border factoring volumes (490bn). It will also allow the industry to speak with a single voice – dubbed by secretary general Peter Mulroy as “the voice of the invoice” – to national as well as supranational regulators.

Leadership team

It is headed by Michel Leblanc, chairman of the executive committee of FCI and deputy vice president of the National Bank of Canada; Peter Mulroy, secretary general; and Erik Timmermans, the former secretary general of IFG who now acts as deputy secretary general. Josep Selles, director of factoring and supply chain finance at Barcelona-based receivables finance institution Gedesco is vice-chair.

The combined organisation is headquartered at the current seat of FCI in Amsterdam, Netherlands, with a branch office in Brussels, Belgium. The first annual meeting of the new organisation will take place in Cape Town, South Africa, 23-28 October 2016.  

A big plus    

“The plus is IFG”, said Leblanc in a press briefing with TFR. He added that by joining together, the new organisation is in a better position to extend the reach of its educational programmes and agreed rules and standards. These include the foreign language element to its education offering, something that FCI had only started recently. In fact, together FCI and IFG have been developing an educational programme on factoring for the ICC Banking Commission, which will continue but as one organisation.

The other tool IFG brings is  the Model Law for Factoring which will also no doubt be developed.

Providers of factoring need intimate understanding of the underlying contract between the buyer and seller, a thorough comprehension of the financial strength of the buyer and seller and an understanding of the underlying invoices, and as such factoring is closely connected with the real economy. Another area of policy and practice development, said the board, was the relationship between factoring and credit insurance.

 “Why does 1+1=3?” asked Mulroy. He explained, “By bringing these organisations together.  Both are already respected, not just by the factoring community and finance community but also the development banks, regulators and central banks from around the world. The industry  wanted clarity and the confusion of why there had been two global organisations supporting the receivables finance industry removed.”

Factoring, added Mulroy, has doubled since 2009, in part  because of the impact of the global financial crisis in general. The rise in prudential regulation and capital requirements imposed on commercial banks resulted in the rise of alternative forms of financing such as factoring, which made banks look for and turn to more capital efficient products, ultimately benefiting the receivables finance industry.It took 150 years to get to €1.2trn but then only a further six years to reach the current €2.3trn in annual factoring volumes.   

Undersung receivables finance tool

There was general agreement from the board that much more needed to be done to raise the profile of factoring globally. Despite its volumes, it is a little understood means of managing open account risk, and often [wrongly] associated with very small businesses struggling for liquidity. Leblanc confirmed that many large Canadian exporters used factoring but simply did not share the experience. TFR has agreed to help with this by running some case studies in future issues of the magazine.

Give Feedback