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Polish Factoring Market Sees Slight Decline in Q1 2024, But Growth Expected Soon

FINANCEPolish Factoring Market Sees Slight Decline in Q1 2024, But Growth Expected Soon

In the first quarter of 2024, the factoring market in Poland experienced a slight decline in turnover compared to the same period the previous year. Member companies of the Polish Factors Association purchased receivables totaling 111.9 billion PLN over three months. This marks a 1.7 percent decrease from the previous year when turnover reached 113.8 billion PLN. The total amount of advances paid was 49.4 billion PLN, which was 7 percent higher than last year. Members of the PZF served 24.8 thousand companies (10.5 percent more than last year), which submitted 7 million invoices for purchase (10 percent more than the previous year).

The Polish Factors Association (PZF) encompasses the majority of entities providing factoring services. It currently has 24 members: 5 commercial banks and 19 specialized firms offering financing through factoring agreements.

Factors affiliated with PZF financed the activities of domestic enterprises for a total of 111.9 billion PLN in the first quarter of 2024. The market thus recorded a decline of 1.7 percent.

“The economic slowdown is still visible. Persistent high interest rates and the diminishing purchasing power of consumers had an impact on the negative turnover dynamics recorded by the factoring market in Poland in the first quarter of 2024. The situation in Europe doesn’t help either. The weak condition of the economies of Poland’s major trading partners, especially Germany, but also France and the United Kingdom, affected the decline in goods exports to these countries and consequently acted as a brake on the scale of financing that entrepreneurs using factoring services reached for. The decline in turnover seems to be small and I believe that it will not increase, as domestic factors show a great ability to respond efficiently to negative phenomena affecting the industry. We are able to quickly adapt to customer needs, offer new product and technical solutions, and increase flexibility in assessing factoring transactions. This can be seen by the growing number of entrepreneurs reaching for this simple and effective form of receivables financing,” says Konrad Klimek, chairman of the PZF executive committee.

Currently, 24.8 thousand enterprises, particularly small and medium-sized, are using the services of PZF-affiliated companies. They have issued close to 7 million invoices, on the basis of which domestic factors provided financing. Data show that both the number of clients using factoring and the number of invoices they submit for financing are steadily increasing. However, their value is decreasing.

“We assume that the factoring market will soon return to the growth trend it maintained until mid-2023. In my opinion, this will happen at the beginning of the third quarter of this year. The previously mentioned innovative approach to product solutions and the stabilization of the legal environment may have a positive impact. Under favorable conditions, the industry will continue to move towards even more advanced digitalization, which will encourage existing customers to increase the number of invoices submitted for financing and new ones to try out this effective liquidity management tool,” adds Konrad Klimek, chairman of the PZF executive committee.

Factoring is predominantly chosen by manufacturing and distribution companies. Eight out of ten factoring clients come from these two groups of entities. They generally issue invoices for significant amounts and with longer payment terms, which means that funds for their current operations remain “frozen”. Factoring allows them quick access to cash and the settling of current liabilities. This enables them to develop their activities without disruptions and offer attractive purchase terms to their customers.

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