Thibaut Robet and Gaëtan du Halgouët, at the head of Fibus (formerly Chateaudun Crédit), a leading European factoring advisory firm, help us better understand the challenges of this financing solution for private equity.
DÉCIDEURS: Can you remind us what factoring is?
Thibaut Robet: Factoring is a financing technique that converts a large part of a company’s accounts receivable into immediately available cash. For B2B companies, which are paid on average within 60 days by their clients, it represents the largest possible short-term financing line.
Who is this financing solution for?
Gaëtan du Halgouët: The primary users are growing companies – those that need resources to accelerate. Factoring provides them with the cash buffer needed to continue purchasing and hiring. It is a relatively low-cost, uncapped resource that adapts to a company’s growth. These profitable and high-performing companies find in factoring a reliable and sustainable source of financing. While often used as a growth accelerator, it is also well suited for crisis situations, as factoring providers can maintain their commitment even when a company reports deteriorating financial results.
“Factoring is the short-term financing with the best cost-to-liquidity ratio.”
Is factoring considered expensive?
T.R.: This is still a common misconception. In reality, it is undoubtedly the short-term financing solution offering the best balance between cost, liquidity generated, and lender commitment duration.
Do companies need to inform their clients when using factoring?
G.H.: In most European countries, as well as in the majority of U.S. states, there is no legal obligation to do so. However, some commercial contracts require suppliers to obtain client approval before assigning receivables to a third-party financier. That said, 95% of factoring agreements we have implemented over the past five years are confidential.
Where can factoring be done under good financial conditions?
T.R.: Pricing and eligibility depend on the geographical location of the invoicing entity. If a company invoices from Germany to a client in Brazil, it benefits from European financing conditions. But if the invoice is issued from a Brazilian subsidiary, local Brazilian rates apply. We have deployed factoring solutions in 25 countries across Europe, North America, and Australia.
“Factoring always remains operational… and when it is non-recourse, it does not affect debt levels.”
Why is factoring of interest to private equity funds?
G.H.: LBO-backed companies usually have revolving credit facilities (RCF) to meet liquidity needs. These facilities are capped and include covenants requiring early repayment in case of financial stress. Even in such cases, factoring remains fully operational. Moreover, when structured on a non-recourse basis, it does not increase leverage. It significantly boosts liquidity while improving financial statement presentation. Increasingly, private equity funds encourage their portfolio companies to use factoring.
When do private equity funds use factoring in their portfolio companies?
T.R.: Factoring is usually considered before acquisition and implemented shortly after closing. Sometimes it is negotiated immediately after signing to ensure financing is available on the closing day. It is often used to fund acquisitions, support refinancing, or facilitate dividend distributions.
Can you give a recent deal example?
G.H.: In 2021, our team worked on around thirty new contracts, including international programs and French SMEs. In one case, we supported a European group with €2.3 billion in revenue to replace and expand its factoring program. Within three months, we secured a €300 million committed facility over five years and seamlessly migrated 23 entities across nine countries. We also supported several clients in extending programs to additional subsidiaries – a strong testament to the usefulness of factoring for corporate groups.
Why did Chateaudun Crédit become Fibus?
T.R.: Over the past five years, 50% of our work has been with international groups – despite our name. A partner once asked us: “How can a company with such a non-international name succeed globally?” We had to admit that our original name, taken from the street of our first office, no longer reflected our business. We therefore decided to become Fibus, while keeping the same mission: financing and securing your business.
What does Fibus do?
T.R.: Fibus helps French companies and international groups finance and secure their business through three business lines: factoring, credit insurance, and digital solutions. In factoring, we manage the entire project lifecycle – from feasibility analysis to implementation, including team training and tender processes. In credit insurance, we help clients select and integrate the best coverage into their credit management processes. Our IT solutions team develops tools that automate and simplify financial and credit risk management processes. Fibus is structured around three teams: factoring (led by Romain Chaufour and Maxime Bertin), credit insurance brokerage (led by Marc Chaqués), and IT solutions (led by Frédéric Pouhet).
What’s new at Fibus in 2022?
G.H.: This year we welcomed two new directors: Frédéric Pouhet, in charge of accelerating digital transformation, and Marc Chaqués, responsible for strengthening the credit insurance business. We plan to hire six new employees across our three business lines. We are also working on a new version of our software with additional features to improve operational monitoring of factoring and credit insurance contracts.
Source: 2022 edition of the Capital Investment Guide, Décideurs Magazine.