SMEs can bridge financing gap with factoring

FACTORING services can bridge the gap in the financing of small and medium-sized enterprises (SMEs) by addressing the challenges SMEs face in accessing funding for business activities. Ms. Kanayo Awani, Managing Director of Intra-African Trade Initiative of African Export-Import Bank (Afreximbank), said that the effectiveness and potential of factoring services to support SMEs became even higher during periods of financial distress and that, because of its unique features, factoring was well-suited for facilitating financial inclusion of SMEs. Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. In Singapore, Fintech companies are offering factoring service to SMEs with up-to-date technology to match borrowers/investors.

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