Factoring services: A powerful tool for SMEs
Friday, 17 July 2020
In the wake of the Covid-19 crisis, factoring faces many challenges but also provides a wide array of opportunities for those who know how to make the best use of it. FCI, a global network of factoring firms, organised a webinar on this topic on Tuesday, 7th of July 2020. Cim Finance was among the panellists and took part in the fruitful discussions, which enabled all participants to better understand the challenges lying ahead. “Factoring and Receivable Finance in Africa amidst Covid-19 – A wake-up Call!” was the theme of this online conference which saw the participation of several financial institutions from the continent, including Cim Finance. In total, over a hundred attendees took part in this event which was an opportunity for the industry players to share their experience.
Strict sanitary measures adopted in most countries in the world to fight the coronavirus is having a profound impact on economies. Many sectors, such as tourism and other export-oriented industries, are facing important difficulties as the air traffic is still affected by travel bans and closed borders in many regions. In the midst of this unprecedented crisis, most companies had to rise to one daunting challenge: ensuring a sufficient level of cash flow to meet their expenses (salaries, rent, debt servicing, etc.) while they had no revenues.
At Cim Finance, the situation was closely monitored by our team to anticipate our client’s needs so as to provide them with the necessary comfort in these testing times. In Mauritius, the authorities took bold and timely economic and financial measures to support companies and industries at large. Although it is difficult to give a full and final assessment of the impact of this sanitary crisis on the business landscape, we can at least acknowledge that these measures have eased some major constraints. It is in this context that Cim Finance launched the Special Factoring Scheme in collaboration with The Investment Support Programme. This financial tool turned out to be very effective for many Small and Medium Entreprises (SMEs), regardless of the sector in which they operate.
As their long-standing partner, Cim Finance is committed to remaining by the side of SMEs looking for financial means to weather this storm and look forward to accelerating their development in the foreseeable future. As a non-banking financial institution, we also support Mauritian companies which are involved in regional or international trade through a complete package of factoring services. These offers have been designed to support business organizations, including SMEs, which are involved in both import and export transactions.
The economic consequences of Covid-19 are opening new business opportunities for Mauritius in Africa, hereby redefining the country’s Africa strategy. Cim Finance aims at playing an instrumental role in this context by being a partner of choice for Mauritian companies wanting to be part of the acceleration of this new Africa strategy ecosystem. Through our International Factoring solutions, we provide exporters with the flexibility of selling on open account terms, coverage against credit losses and, collection and sales ledger administration services. It gives the operators a 90% risk protection and an increased competitive advantage by providing goods on open credit terms. It also includes an immediate draw of funds in accounts receivable in currency, ranging from 70% to 90% of the invoice value, while the accounts receivable management is taken over by the factor company.
Companies involved in import activities also have their own needs. That is why Cim Finance came up with a special package for import factoring to give our customer the possibility to obtain a short-term credit for foreign purchases. This allows the company to buy on open account terms, expand purchasing power without using existing credit lines, hence allowing them to purchase supplies without delays. By giving these companies this kind of flexibility, these services enhance their capacity to deal with a larger number of suppliers. Thanks to our membership to FCI, we are able to open the doors to an extensive network of around 40 members in Africa and over 400 factoring companies present in 90 countries worldwide.
In the aftermath of this crisis, financial institutions have a very important role to support companies and build up their resilience as they gear up for future growth!
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