The expectations are for the sector to grow steadily with around 50% per year in the next 3-4 years

“Factoring in Bulgaria has a huge potential for growth, in all emerging markets in Central and Eastern Europe“, said Philip Genov, Executive Director of UniCredit Factoring on the second conference on credit risk management, organized by ICAP Bulgaria. At the end of last year the factoring industry accounted for 1.5% from the GDP in Bulgaria against a potential of around 7%. For the sake of comparison in the developed West European markets this sector accounts for 10% and continued to increase.

“Factoring ensures flexible financing compared to the traditional banking and this is the reason for its growth“, Mr. Genov added. In addition factoring is one of the best ways to finance the exporting companies and the growth-experiencing ones.

The five largest markets of the factoring industry are the UK and Ireland – 17%, France – 11.4%, Italy – 10.7%, Germany – 8.8% and Japan - 7.3%. The five largest factoring companies in each country account on the average for 87% from the turnover in the sector.

The average turnover of the factoring companies’ clients worldwide is EUR 3.1 mio, which confirms the understanding that this type of financial service is directed mainly at mid and small companies.

“A weak side of the factoring industry in Bulgaria is the shortage of skilled staff“, Philip Genov explained during the conference. He also pointed out that some of the entering new players (mostly banks) under-estimate the specificities and the risks of this type of financial service.

Despite the difficulties the expectations are for the sector to register a stable growth with around 50% per year in the next 3-4 years.