Whether the economic environment deteriorates or a company underperforms for reasons specific to its own operations, factoring remains the cheapest and most stable credit line available: a financing solution that should attract the attention of finance departments and restructuring professionals, particularly in 2023. Interview with Gaëtan du Halgouët, founder of Fibus (formerly Chateaudun Crédit), and Romain Chaufour, Head of Factoring.
DÉCIDEURS: Can you remind us what makes factoring so specific?
Romain Chaufour: Factoring allows a large part of a company’s accounts receivable to be converted into cash. This financing tool is sometimes not well understood by financial decision-makers. Yet it is particularly relevant for B2B companies, which are paid on average within 60 days. For these firms, factoring is the largest possible short-term credit line and a very powerful cash-flow lever.
Gaëtan du Halgouët: Another advantage of factoring is that it is off-balance-sheet and therefore does not appear on financial statements. Regardless of a company’s financial health, it should attract the attention of both investment funds and CFOs. Contrary to popular belief, restructuring situations do not prevent the implementation or renegotiation of factoring agreements.
What are the advantages of factoring in restructuring cases?
R.C.: There are many. The first advantage is the speed of implementation. When a company is under pressure, effective solutions must be found immediately, as the stakes are critical. We can set up a factoring program in just a few days, and invoice financing is made available within 48 hours – a major advantage compared to other financing solutions.
G.H.: Beyond urgency, another key point is the size of the financing obtained. With factoring, significant funding can still be secured even in underperformance situations. Factoring can complement or even replace bank financing such as RCF, overdrafts, or Dailly credit. When a company can no longer repay its debt, banks lose confidence and tend to reduce or withdraw credit lines, further weakening the company. Factoring provides an alternative and ensures financing continuity.
R.C.: A final advantage in restructuring situations is that factoring is compatible with amicable or collective procedures. Factors remain open to discussion and often support distressed companies. In such cases, our role is to negotiate with the existing factor, if there is one, and simultaneously find a new partner. We are very familiar with each factor’s expectations.
“The company is no longer dictated to by its environment and shifts pressure onto a third party over which banks have less control.”
G.H.: More broadly, our role is to reduce the pressure placed on CFOs by banks. It is not uncommon for banks to push their own factoring subsidiaries, which is not always the most suitable solution for the company. By enabling the finance department to make a free and informed choice, we give them more flexibility. The company is no longer dictated to by its environment and shifts pressure onto a third party over which banks have less control. Thanks to factoring, companies regain negotiating power with their creditors.
Do you have projections to share with our readers for 2023?
G.H.: During the rollout of state-guaranteed loans (PGE), companies were suddenly able to borrow up to 25% of their annual revenue with few or no conditions. Today, these loans must be repaid with significant instalments that will absorb a large share of cash flows. Setting up a factoring programme can help repay part or all of this debt. A company’s accounts receivable represent between 15% and 20% of its annual revenue.
R.C.: In 2023, we are seeing a combination of slower growth, inflation in raw material and energy prices, and rising interest rates. These increased risks are leading to lower appetite from banks, particularly in lending. Banks are tightening their credit criteria for companies – criteria that factoring bypasses, as it is based on accounts receivable rather than equity or profitability.
G.H.: Factoring is also more attractive because it avoids multiplying banking partners. Take an SME or mid-cap company seeking a €10 million facility: if its receivables are at least equivalent, it can secure this financing quickly with a single factor. With traditional bank credit (RCF, overdraft, Dailly), it would need to negotiate with several banks. Moreover, its solvency would directly influence the amount granted. Factoring is a single financing line, quicker to implement and more stable over time.
Key takeaways
- In 2022, Fibus (formerly Chateaudun Crédit) redefined its identity and highlighted the complementarity of its three areas of expertise: the Fibus Factoring, Fibus Trade, and Fibus Digital brands were launched.
- Fibus recorded 30% growth in its latest fiscal year; 48% of its revenue is generated internationally.
- The Fibus teams handled more than 50 mid-cap and large-cap deals, as well as 100 SME and small-business cases in 2022.
- Fibus has 42 employees based in Paris, Poitiers, Lyon, and London; a Frankfurt office will open in 2023.
- In 2023, Fibus will launch ARI, a digital solution designed to optimise factoring and credit insurance programmes, with no equivalent on the market.
About the interviewees
Gaëtan du Halgouët founded Fibus (formerly Chateaudun Crédit) with Thibaut Robet in 2005. They specialised in receivables financing and became Europe’s leading factoring broker and a leader in credit insurance brokerage. Fibus advises companies of all sizes, from SMEs to international groups, and is particularly active in private equity and restructuring contexts. Romain Chaufour is Head of Factoring and responsible for business development.