Ewa Gawrońska-Micuń, member of the management board at Bibby Financial Services, talks to the BPCC’s Michael Dembinski about factoring as a solution in trade finance at a time of uncertainty and slow economic growth
You are best known for factoring – invoice finance. How is the take-up of factoring going among businesses in Poland? Which firms are most likely to reach out to you for this form of finance?
Factoring has become increasingly popular among Polish businesses, especially in recent years. According to the Polish Factors Association, the factoring market in Poland showed resilience and a promising recovery in 2023 despite the economic challenges. In the first quarter of 2024, this positive trend continued, with turnover increasing by about 12% compared to the same period last year. This growth is largely due to the flexibility and immediacy of funds that factoring provides, which is crucial in uncertain economic times.
The current slow recovery of the Polish economy, with a GDP growth of 2.0% year-on-year in the first quarter of 2024, underscores the importance of flexible financial solutions. This is especially true for industries particularly impacted by economic uncertainties, low demand, supply chain disruptions, or high operational costs.
Poland’s central statistical office, GUS, reported that in May, sold industrial production was 1.7% lower than a year earlier. Therefore, sectors such as manufacturing, transport, logistics, or those dealing with the export of goods like furniture – where production in May was 13.3% lower than the previous month – are increasingly seeking alternative financing options like factoring to maintain cashflow and operational stability.
How do you assess Polish exporters in terms of their desire to expand into new markets and in terms of their sophistication? What insights about trade finance would you like to share with Polish exporters?
This pivot is driven by the need to find alternative markets amid weakened demand in the EU, especially in Germany, where industrial production struggles. Conversely, signs of stabilisation in non-EU markets present opportunities that Polish exporters are keen to seize. For instance, exports to Ukraine, China, Canada, the UK, and the US have increased substantially recently.
Expanding into new markets offers a strategic growth opportunity, making geographic and sectoral diversification a necessity for maintaining competitiveness. In this context, the security of export transactions becomes paramount. Factoring tools provided by institutions like Bibby Financial Services are invaluable. These instruments offer financial liquidity and protection against buyer insolvency and currency fluctuations, as export factoring provides financing in the invoice currency.
Factoring also includes verifying the financial condition and payment history of potential buyers. Detailed analyses by the factor minimise the risk of insolvency, enabling exporters to focus on sales development and strategic business aspects. This sophisticated approach helps Polish exporters navigate complex international markets effectively.
Polish exporters must remember that with traditional European markets showing weak demand, exploring opportunities in emerging markets and regions experiencing economic recovery can provide new growth avenues. When entering new markets, they can use factoring to ensure steady cash flow and protect against payment defaults. It is also important to employ financial instruments to hedge against currency fluctuations, which can impact profitability when dealing with multiple currencies. Last but not least – keep abreast of global economic trends and be ready to adapt strategies as market conditions change. This flexibility can provide a competitive edge in uncertain times. By leveraging sophisticated trade finance solutions and exploring new markets, Polish exporters can continue to thrive despite the global economic headwinds.
Do you see the predicted upturn in the Polish economy among your clients? Which sectors, which markets are showing strongest growth?
Unfortunately, the recovery remains slow and uneven across different sectors. This recovery is largely driven by domestic consumption rather than a broad-based economic rebound. The May PMI reading for Poland showed that the economic situation in the Polish manufacturing industry is still poor, as the S&P index fell to 45.0 points, the lowest in seven months. For the 27th month in a row, new orders and export sales also declined.
This means that most sectors remain under pressure. Despite these challenges, factoring continues to be a crucial tool for businesses, providing immediate cash-flow and helping manage risks associated with international trade. This strategic use of trade finance solutions supports businesses through this uneven and prolonged recovery phase.
How do issues such as supply-chain transparency, anti-money laundering, and sanctions-busting affect trade finance?
These regulations are crucial for ensuring the security, legality, and efficiency of international trade transactions. These factors enhance risk management and fraud prevention by clearly tracking goods and financial flows and fostering trust and regulatory compliance among trade partners.
However, adhering to these regulations also increases operational costs and can lead to delays in processing transactions due to additional checks and due diligence required. Despite these challenges, the integration of these factors into trade finance operations results in enhanced security, and protection against fraud and illicit activities. This adherence enhances the trust and credibility of financial institutions, fostering stronger trade relationships and supporting long-term business growth. So – while these regulations add complexity and costs, they’re essential for maintaining robust and compliant trade finance solutions that benefit global commerce.
Bibby Financial Polska is part of the Bibby Line Group, a family firm founded in England over 200 years ago. How does that history and tradition shape your firm’s ethos and activities?
This venerable heritage instils a powerful sense of integrity, responsibility and innovation in our operations.
Integrity and trust are foundational to our business, guiding us to prioritise ethical conduct and transparency in all dealings. Our clients rely on us for honest and fair financial services, reflecting the trust built over centuries.
We are deeply committed to responsibility, conducting business in ways that positively impact our stakeholders and communities. This includes supporting local initiatives and ensuring sustainable and ethical practices across our operations.
Innovation, driven by our extensive experience, allows us to develop modern financial products that address contemporary challenges. Our diverse range of services, including factoring and trade finance, supports businesses in dynamic markets.
Diversity and inclusion are key strengths that drive our success. A diverse workforce brings varied perspectives, fostering creativity and resilience, which enhances our ability to serve a wide array of clients effectively.
How does Bibby Financial Services incorporate diversity and inclusion into its leadership and workforce, and how does this contribute to the company’s overall success?
At Bibby Financial Services, diversity and inclusion are integral to our success. Our commitment to creating a diverse and inclusive workplace is deeply embedded in our corporate culture.
Our leadership team embodies this commitment, bringing a wealth of perspectives that drive innovative decision-making and effective problem-solving. We foster an inclusive work environment where all employees feel valued and respected, implementing policies that promote equal opportunities for everyone.
We support various diversity initiatives, including training, mentorship programs, and employee resource groups, to build a more inclusive and supportive workplace. This inclusive culture enhances our ability to understand and serve a broad range of clients, tailoring our financial solutions to meet their unique needs.
Moreover, our diverse workforce improves employee satisfaction and retention, leading to a more motivated and productive team. Our ongoing commitment to diversity and inclusion helps us attract and retain top talent, fostering a culture of excellence and continuous improvement. This dedication not only reflects our values but also drives our business success, allowing us to deliver exceptional service and fostering long-term growth.
