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.
Some lending platforms are poised to shift towards hybrid models to stay afloat, a financial services think tank claimed on Monday. In UK, SME lending growth has become relatively stagnant and that less than half of UK small businesses are aware of new online sources of finance. This casts a shadow over the volume growth that P2P lenders need to achieve to become a mass market. Attracting borrowers and scaling up investment volumes is going to be one of the key challenges for platforms going forward, the report said, alongside proving the soundness of their underwriting during a credit downturn and investing in continued innovation in customer service. New transformation of P2P Lending platforms is a signal of providing more professional and reliable service for both Investors and SME Borrowers.