TBY talks to the general managers of two factoring firms on sector evolution, competitive advantages, and targets for the future.
Where did the focus on factoring start?
HULKİ KARA Garanti Factoring has a large client base in the commercial, corporate, and SME segments. As of end-2011, we provide services to 3,506 active clients. We meet the needs of our clients through seven regional offices and a corporate portfolio. The first-quarter figures for 2012 have not yet been announced, but our target is to reach double-digit levels in terms of asset size and turnover. We expect the sector’s turnover to grow at a rate of around 15%. Our budgeted growth rate this year is 25%, and we strongly believe that we will be able to reach this goal as a result of a new organizational structure and the adoption of an innovative service model.
BÜLENT ERDOĞAN I’ve been in this sector for the past 12 years. Factoring companies were legalized in 1996. I started at Hedef Factoring in 1998, and at that time the sector hadn’t yet matured—it was entirely new in Turkey. I started at the lowest rung and climbed up the ladder, learning every detail along the way. I eventually became responsible for the branch network. Our revenue in 2009 was TL550 million. The headquarters were in Ankara, but I was in Istanbul because that’s where the biggest share of our market was. After having worked at Hedef for 12 years, I moved on to First Factoring. I’ve been here for just under a year. I still think factoring isn’t done properly in Turkey. There are a lot of factoring companies, but I still think that most of them, maybe around 70%, are not engaging in proper factoring. Our aim is to educate and consult customers about factoring, how it should be done, and what they have to gain from it. We aim to educate our customers while also enabling them to use credit. When marketing to our clients, we explain the advantages of factoring and let them know that if it is used in the right way, factoring can benefit them greatly.
What sets you apart in the market from similar factoring offerings?
HK The competition is fairly tough in the factoring segment. To stand out among this competition is to meet the needs of your clients by providing a high-quality service and offering the right set of products and solutions at the right speed. Given the tough competition, the potential of the sector is promising. The penetration rate, which is calculated based on the proportion of the sector’s turnover in relation to GDP, is 10% in most European countries. In Turkey, penetration has reached 7%. This figure shows that there is a long way to go in the development of the factoring sector, and innovative companies with a sound financial structure as well as fast service processes will have a competitive advantage.
BE We first of all place an emphasis on educating and training our own personnel about factoring, and then transferring this knowledge to our clients, depending on how those clients are prepared to use our services. We always aim to provide the best possible service. We believe that every company we extend credit to is our partner. We look at the situation from the point of view of a partner because our money is also involved in the client’s company. That way there’s a healthy symbiosis.
What are your targets?
HK Although we envisage growth in the sector, I believe that 2012 will be a tough year. The recent and accelerated discussions regarding the new Factoring Law will be positive in terms of the image and development of the sector. Sector players have been making significant efforts to cooperate with the National Factoring Association, and the Banking Regulation and Supervision Agency (BRSA) has provided the right support. We hope that the outcome will be in line with the expectations of the sector. The company aims to achieve 25% growth in total turnover and to expand its market share within the SME sector. We also work toward the development of the international factoring business and the expansion of the customer base.
BE We aim to increase our revenues further—and in a healthy way—and we’re succeeding. First Factoring is in a great place now. We have no problematic credits, and we’re aiming to be among the top 10 factoring companies in the next two to three years. We’ve also trained our personnel in this respect. We’re always active and in the field, not just sitting here in our offices. We are organically involved with our client firms. We’re also one of the only factoring firms to base the credit we extend on inspections of the companies that our clients work with.
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