Egypt issues factoring activities to increase companies’ liquidity

Minister of Finance Amr Al-Garhi issued a decision to add factoring activities to financing activities to increase companies liquidity.

Factoring allows companies to sell outstanding debt to a third part at a discount rate to receive the financing needed to continue working.

The ministry’s decision will allow factoring within the permitted financing activities for operating companies, similar to securitization and financial leasing activity, to allow traders in factoring the same access to accounting and tax benefits.

In a press statement issued by the ministry, Deputy Minister of Finance for Treasury Mohammed Maait said that this is the first time the ministry has issued a decree allowing factoring activity within financing activities.

Maait noted that the decree targets accelerating the fund raising process, especially for trade companies, adding that this activity helps in speeding up business activity and the movement of buying and selling in the market.

This is in addition to the speed of the provision and management of finance for trade companies that sell in installments and long-term installments, which will positively reflect on increasing liquidity.

Maait added that this decision is being carried out by the government to support the sale, purchase, and activation of finance companies and allow the establishment of companies specialising in factoring, which, under this decision, will receive the accounting, fiscal, and financial advantages needed to assist in the growth of activity and the companies

source: Ahram Online