Décideurs. What is factoring in broad terms?
Gaëtan du Halgouët. Factoring is a short-term financing tool based on a company’s B2B receivables. It is used by more than 33,000 companies and by one out of every two mid-sized companies (ETIs) in France today. It converts nearly the entire receivables ledger into immediately available cash. This cash can be used to fund investment, operating expenses, debt repayment, and more. For executives, it is a very powerful liquidity lever, suitable both for long-term strategies and urgent situations.
Romain Chaufour. Take a B2B company with €50 million in annual revenue. With 60-day payment terms, it constantly has around €8.2 million tied up in working capital, which is not available for other uses. By selling its receivables to a factoring company, it can recover 80–90% of what is owed within 48 hours instead of 60 days – around €6.5 to €7 million in cash.
How compatible is factoring with restructuring situations?
G.H. In distressed situations, factoring is particularly well suited because it enables speed. This speed applies at two levels: contract setup and funding. Implementing a factoring program, including a competitive tender process, can be done in a few weeks. Last summer, we arranged a €20 million financing in 22 days – a record. Once the contract is signed, invoices are paid within 48 hours after being assigned to the factor.
R.C. Cash becomes critical when a company is struggling. Because factoring lines are larger than those provided by RCFs, overdrafts, or French Dailly assignments, it can complement or even replace these instruments. When bank credit lines tighten, factoring restores stability and continuity in financing.
How do banks view factoring in distressed situations? Has their approach changed?
G.H. Today, when a company can no longer repay its debt or state-guaranteed loan (PGE), banks first ask whether a factoring arrangement is in place. A deterioration in financial statements does not prevent factoring from being set up. It depends more on the quality of the customer portfolio and business activity than on financial performance.
R.C. In restructuring, having a factoring facility builds trust and helps secure agreements with banks to reschedule debt. The factor provides liquidity and supports debt repayment. Increasingly, the factor is seen as a “trusted third party” by banks. Experience shows that proactively introducing a factoring solution can be a prerequisite for reaching an agreement in amicable proceedings.
G.H. Recently, advisors of a €40 million revenue company – anticipating it would not be able to meet its debt obligations – asked us to provide firm factoring offers as a condition for approving a conciliation agreement. Factoring often helps avoid formal insolvency proceedings, which is always preferable to quickly get a company back on track.
Can situations still be improved when factoring programs are already in place?
R.C. There are always solutions, negotiation room, and partners to challenge. This is where our role as a broker is key: knowing all market factors, their practices and expectations allows us to structure tenders efficiently and save time.
G.H. Take a case from last autumn: the factor of an electronics distributor, whose activity was declining, had become restrictive. Since not all factors react the same way in downturns, our mission was to quickly find a backup solution to secure financing and restore the original funding level.
R.C. Thanks to our credit insurance expertise, we even managed to secure a higher level of guarantees than in the original program. Credit insurance is a key lever for improving financing conditions in such cases.
G.H. One should never hesitate to reassess the credit insurance embedded in factoring contracts. Depending on the business and customer base, it may be better to separate it: transferring it from the factor to a standalone insurer can make it easier to negotiate customer-by-customer coverage.
Are factors becoming more conservative in a tightening economic environment?
G.H. Practices vary widely, but generally factors remain open to discussion and willing to support distressed companies. Some will start financing during proceedings, while others prefer to wait until an agreement is reached with creditors.
R.C. If the company’s factor is also its bank and debt renegotiation is required, it may be preferable to switch factors to spread risk. Separating the bank and the factor also gives management more flexibility and reduces banking pressure.
“Factoring is the short-term financing solution with the best ‘cost vs. amount financed’ ratio on the market, even in high-interest environments.” – Gaëtan du Halgouët
Do you have a specific approach at Fibus for restructuring cases?
G.H. Our mission is to identify all possible financing pockets for our clients, whether in turnaround situations or not. We systematically explore every option and push partners to innovate and design new structures. This is why we built a credit insurance division alongside factoring, and became a software provider in this space.
R.C. We developed our own digital platform, ARI. It allows clients to manage and optimise factoring and credit insurance within a single interface, across multiple clients, countries, and currencies. With ARI, finance teams immediately see available financing headroom that can be activated.
G.H. We have the largest dedicated factoring team on the market, with around 60 experts. In restructuring situations, this allows us to mobilise quickly. Our risk analysis is more in-depth than elsewhere, and our tenders are highly detailed, helping us save time and identify quick wins to maximise financing capacity.
Outlook for next year
G.H. The outlook will be mixed. Some companies will struggle with debt repayment, where factoring will help refinance part of their loans. Others will continue to invest domestically or internationally despite uncertainty. For them, factoring will remain the most cost-efficient short-term financing option, regardless of interest rates.
R.C. Payment delays will continue to lengthen, increasing pressure on working capital. A new EU regulation aiming to reduce payment terms to 30 days across the Union is being prepared. Its implementation will be complex and is unlikely to replace the current directive before 2025, but companies should prepare for it.
G.H. In this context, credit insurance has a strong role to play by enabling additional financing capacity while securing business activity.
Key figures
- 1,300 companies supported by Fibus since 2005, mainly SMEs and mid-sized companies
- +15% growth: advisory work for more than 50 groups and 110 entities in 2023
- 37 countries covered: more than half of revenue generated internationally
- 60 experts in France and a London office
*Papeteries du Léman (2023), Canal Toys (2020), Carbone Savoie (2019), Doux (2016), Symacom (2016), Anovo (2015).