Specialized financing sector stimulates national economy
2016 IN REVIEW: THE NUMBERS OF SPECIALIZED FINANCING IN PORTUGAL
SPECIALIZED FINANCING SECTOR STIMULATES NATIONAL ECONOMY
The positive values achieved by the specialized financing instruments in Portugal point to a positive evolution for the economy in 2016, according the Portuguese Leasing, Factoring and Renting Association (ALF).
Renting was one of the protagonists of specialized financing in Portugal during 2016. According to ALF’s data, this sector grew by 15.1% with a production of 624 million euros and 31.840 new vehicles acquired (25,436 light passenger vehicles and 6,404 light commercial vehicles) – 11.5% more than in 2015. The fleets managed by Renting companies totaled more than 99.500 vehicles (a growth of 8% compared to the end of 2015) with a value of 1.46 billion euros, 11.6% more than the previous year.
“Renting has accompanied the tendencies of the automotive sector and of the Portuguese economy in the last years, having returned to a new period of growth in 2014. ALF’s figures show that Portugal is starting to treat mobility as a service with normality as well as valuing all its main advantages associated with innovation, efficiency, sustainability and economy of costs”, highlights António Oliveira Martins, ALF’s Vice-President in charge of Renting.
In 2016 Leasing continued to present a positive evolution, with Financial Leasing of Real Estate standing out with an increase of 10% in its production, corresponding to 742 million euros. Financial leasing of movable assets which finances all types of equipments and vehicles also registered a growth of 5% relative to the previous year, with a production of 1.7 billion euros (1.1 billion euros in vehicles and 591 million euros in equipments). In total, Leasing was responsible for injecting 2.46 billion euros worth of investments in Portugal over 2016.
According to Eduardo Moradas, ALF’s Director in charge of Leasing, “reading these figures one can attest that companies, specially SMEs, are taking advantage of the economic recovery to modernize their productive structures, obtaining financing through Leasing due to the advantages they are able to get, like contract flexibility, reduced monthly rents and means of payment”. The spokesman adds that “it is a very well-known and used product and we are happy to verify that its use by economic agents is growing in such an expressive fashion”.
The Portuguese Factoring market acquired 24.5 billion euros in invoices corresponding to a 7% increase in relation to the 22.9 billion euros registered in 2015 and thus consolidating the growth started two years ago.
International Factoring continues to be the segment which registers the highest growth rate, 22% compared with the previous year – equivalent to an added 613 million euros in acquired invoices to make up a total of nearly 3.5 billion euros in 2016. In this segment, Export Factoring is the category which contributed most with 3.2 billion euros in purchased invoices (in 2015, it had registered 2.7 billion euros).
Domestic Factoring registered a turnover of 12.6 billion euros with a growth of 2.6% (320 million euros more than in 2015). This component represents 51.3% of the total Factoring sector, with 5.9 billion euros corresponding to Recourse Factoring1 and 6.7 billion euros to Non-recourse Factoring2.
Confirming (or Reverse Factoring)3 continued to grow in 2016 at a rate of 8.5%, totaling a turnover of 8.5 billion euros, which translates into 663 million euros more than in the previous year.
“This data confirms that Factoring has continued to be a strong and stable source of specialized financing in Portugal, with a great growth potential amongst SMEs in particular, which are increasingly using this mechanism. Besides providing a better treasury management, by transforming fixed costs in variable through the outsourcing of collection including in exports and imports, the possibility to enable immediate liquidity should be stressed”, stated Rui Esteves, Vice-president of ALF in charge of Factoring
NOTES:
1 Recourse Factoring – In this segment, the client company of the factor (assignor) benefits from management and collection services and can also choose to finance the assigned invoices. The factor has the right of return over its client relative to the acquired credits which are not paid by the debtors in their respective payment deadlines.
2 Factoring Without Recourse – In this case, the client company (assignor) benefits from management and collection services as well as the covering of insolvency and/or non-payment risks, also being able to opt for the anticipation of funds. This option provides an added security to credit sales.
3 Confirming (or Reverse Factoring) – In this segment, the factor pays the suppliers of its client, with the possibility of making these payments in advance. In this last case, the supplier will become a client of the factor (assignor) in the context of a factoring contract.
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