Emirates Bank begins factoring

The new economic opportunities created by globalisation require regional businesses to embrace new tools, analysts say.

Among these tools is an innovative financial concept called factoring, according to Abdul Wahid Al Sayaah, assistant general manager of corporate banking for Emirates Bank.

In line with Emirates Bank's efforts to offer new products to meet market needs, factoring services were introduced as a way to help corporations manage their domestic and international trade, officials say. Factoring provides benefits including consistent cash flow, lower administration costs, reduced credit risks, providing companies more time to concentrate on their core business activity, officials say. Emirates Bank can even undertake to collect payment from the buyers and provide up to a 100 per cent protection against bad debts in transactions which meet criteria, officials say.

"Factoring is a relatively new product in our region, with very few providers of this service although there is an estimated $14 billion [Dh50.4 billion] turnover in factoring services in Middle East and Africa," Al Sayaah says.

Almost every industry can benefit from factoring, says Maninder Bhandari, head of transaction banking for Emirates Bank.

Emirates Bank has become the first local bank operating in the UAE to join Factors Chain International, officials say.

FCI is a global association registered in the Netherlands. Since 1968, FCI has grown to 180 members in 54 countries and become a globally recognised body.

With more and more cross border business conducted on an open account basis, factoring is a now a global industry with an estimated annual turnover of $950 billion (Dh3.4 trillion) to $975 billion (Dh3.5 trillion).

"Emirates Bank has an expert team of professionals running our factoring business, offering a multitude of services including factoring finance, sales ledgering, payments reconciliation, collections support, bad-debt protection, etc," Al Sayaah says.