Digital Factoring for SMEs. CEE Region


This year we decided to launch a new study and analyze the availability of factoring products to SME customers via digital channels.

The lockdown period and some restrictions in banks’ credit policies should have made factoring services more popular among SMEs and increased the volumes in the micro and SME segments as these customers remain underserved by financial institutions. Indeed, we saw some increase in interest among small businesses in factoring solutions, as Google searches for key words related to factoring increased by up to 40% from mid-March. Some factoring FinTechs reported seeing an increase in new applications by 20-25% from mid-March.

The scope of this year’s analysis is limited to 12 banks and factoring companies, and these are the players that offer online application for domestic factoring in the CEE region. The estimated general number of banks and factoring companies in the CEE region is 75, including 67 members of FCI and a few FinTechs.

Here is the distribution between the countries and organization types:

Snapshot from the Digital Factoring for SMEs Study (CEE Region)

Among countries in the CEE region, Poland has the greatest number of factoring companies (4) and banks (3) which offer a digital process for factoring products for SMEs.

To market digital factoring quickly (especially micro factoring), we see examples of launching joint solutions between banks and FinTechs (in June 2020, Santander Bank Polska launched micro factoring for private entrepreneurs in cooperation with the factoring company NGF).

The product analysed in the study is domestic factoring (for invoices issued to domestic counterparties in local currency or euros.

Snapshot from the Digital Factoring for SMEs Study (CEE Region)

We believe that the availability of factoring products for micro and small companies is equal to the availability of online applications at least due to the following reasons:

  • Small businesses need very quick and easy solutions to cover their cash-flow needs. Easy – because they do not have time for long product processes as they are 100% engaged in their business processes and should just earn money. And a quick response is vital for them as they more frequently operate on the edge of the break-even point than corporations and are more agile by nature.
  • Having manual processes for factoring products in banks or factoring companies kills interest from the micro and small business segment and makes it unprofitable for financial institutions. It only makes sense when servicing bigger SMEs or corporate customers.
  • Limited opportunities for physical contact with branches and relationship managers during and even after lockdown is forcing the majority of sales to digital channels.

Before the lockdown, only 1-4% of SMEs (depending on the country) were acknowledged with the factoring. We are seeing ample opportunity to acquire SME customers for factoring services this year (despite the forecast of a slowdown in the global factoring market till the end of 2020) by offering them simple and quick digital solutions.

Watch the recording of the webinar devoted to the outcomes of the Study: