In the actual global context, when financial crisis drills into the companies’ profits, the main risk for the factoring market is fund costs’ raise up to a level that invoice payors may consider prohibitive. Wall-Street interviewed Valentin Chirca, managing director at the Factoring Company, with respect to the risk and growth potential of the factoring market.

“Many risks may emerge when funding costs would be so high, that the companies urging for development may consider them prohibitive, as the price is too high to carry out an activity in profitable conditions. The risk is both from interbanking interests and from currency exchange rate”, Chirca stated.

Since the beginning of the financial crisis, The Factoring Company had no problems in cashing money from debtors. However, the issue may appear on another front: the lenders in the country announced a growth of funding costs which will have negative impact on the company’s clients. On the other hand, no bank has ever drawn credit lines or blocked loans.

As for costs, the company charges a factoring fee of 1% of the overall invoice and an interest charged at the sold of current bills, the interest being calculated on ROBOR, adding margins of nearly 3-4%.

“In the present conditions, we will re-gauge the margins according to our funding sources. We have no data at the moment to estimate what will happen next, if and how much the costs will increase for our clients. We expect the crisis to dent the business, however we still don’t know what will be the extent of the damage, yet the costs will surely climb”, Chirca added.

The factoring company funds 80% in average of the invoice’s value (20% is the returned sum in case of payment collection), and the average period of funding is 80 days. “This means we fund bills for 30-120 days”, Chirca mentioned.

Chirca outlined that the market