Factoring market - development and economic situation in 2008 and 2009

Just as in the past few years, the German factoring market was able to demonstrate its strength anew in 2008. Despite the financial crisis, the dynamic growth of this market in the past was even outdone in 2008.

The total turnover of the factoring companies associated in the German Factoring Association (Deutscher Factoring-Verband e.V. - DFV) increased by 24.35%from 83.5 billion Euro in 2007 to 103.84 billion Euro in 2008. Even during the current global crisis, the factoring industry was in 2008 able to continue the successes marked during the last two decades. Considering only the last five years, the factoring industry was able to more than double its turnover.

During 2008, 20.33 billion Euro were added to the total turnover of the DFV's member-companies. The factoring-ratio, i.e. the relation between the gross domestic product (GDP) and the total of outstanding balances of receivables bought by factoring companies, rose by 0.13% to 3.58% in 2008. Thereby, factoring has become an even more important component in Germany's national economy, especially for SMEs.

During the first half-year in 2009, however, the restrictions on the financial market as a result of the financial crisis have also left its marks on the factoring industry as more and more enterprises use their receivables to secure and strengthen their liquidity. During the first six months of this year, the companies represented by the DFV noted an increase in customer numbers by more than 47% from approx. 5900 to approx. 8700. During the current financial crisis, many enterprises turn to factoring as a form of financing which is independent from banks and which is especially suitable for outstanding balances of receivables from SMEs. Therefore, factoring has contributed considerably to managing the current crisis, despite the general liquidity squeeze.

Nevertheless, the highly elevated amount of new customers during the first half-year of 2009 was not sufficient to compensate the loss in sales resulting from the existing client base. Therefore, the German factoring market for the first time ever registered a notable decrease in turnover due to the fact that the factoring customers' sales and turnovers have plummeted. The turnover of the 26 leading German factoring companies represented by the DFV showed no growth for the first time since 1977, but rather decreased to 43.26 billion Euro in the first half-year of 2009. Compared to the total turnover during the first half-year in 2008 (50.76 billion Euro), this denotes a minus by 14.78%. In the import business, the factoring volume went down from 1.01 billion Euro in the first half-year of 2008 to 0.91 billion Euro in the first half-year of 2009. The decrease is even clearer in the export business where the factoring volume slumped by 17.55%: from 13.14 billion Euro during the first half-year of 2008 to 10.75 billion Euro during the first half-year of 2009. Some industry sectors observed a slip in sales of up to 40%, which also led to a change in the ranking of key branches for the factoring industry.

It is also worth mentioning that the number of enterprise bankruptcies rose by 0.45% in 2008 and that it is generally expected to rise even further in 2009. Notwithstanding, the average collection period was shortened by 1.5 days to 40.5 days in 2008. This can also be attributed to the fact that factoring companies have paid particular attention to the compliance with terms of payment, especially in problematical industries, ever since the first indications for a financial crisis arose.

In order to counteract the crisis having further negative effects especially on German SMEs, the DFV advocates governmental measures to alleviate the "credit crunch" and the restrictive conduct of credit insurances.