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Factoring

Factoring is a type of financing, which is a means to obtain short-term funding to increase cash flows. It involves the factor purchasing the current and future financial rights of the debtor, arising from the sale of goods or the provision of services, at a value less than their actual worth, in order to provide cash liquidity.

 

Factoring is considered one of the financial solutions for small and medium-sized enterprises (SMEs), as these companies often face challenges accessing financing sources, which are the lifeblood for this type of business. Factoring contributes by providing liquidity to these companies, aiding in their growth and increasing their role in the economy.

 

The PCMA, in collaboration with the European Bank for Reconstruction and Development, has drafted a factoring law project. This draft is in line with local laws, aligns with international best practices, and is implementable. Experiences of neighboring countries in this regard, specifically the United Arab Emirates, Jordan, and Egypt, have been reviewed.

 

Regarding actual activities, currently, there is one company practicing factoring in Palestine. The company has obtained a no-objection certificate from the PCMA to engage in this activity. It will be formally licensed upon the issuance of the law and its accompanying regulations.

 

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