Boosting trade with new financing tools via Armenian banks
Factoring is a form of financing in which a business sells its accounts receivable to a bank, enabling the business to accelerate its turnover.
Such an innovative trade finance product has generated high interest among EBRD partner banks participating in our Trade Facilitation Programme. However, most banks in our region currently lack detailed know-how about processing factoring transactions.
Armenia has been developing its factoring market since 2008. To increase the volume of operations and help new banks introduce factoring into their trade finance product range, in 2015 with support from the European Union, we facilitated the transfer of know-how to five Armenian financial institutions.
As a result, Araratbank launched factoring as a new product in 2015. Its first factoring client is a local company with 18 employees that engages in the distribution of motor and transmission oils and lubricants. The firm imports from various companies, including some in Germany, and uses factoring to manage cash flow related to its local distribution to over 130 buyers.
Zaruhi Melkonyan, Araratbank’s Head of International Transactions Department said: “The new trade finance instrument has allowed us to expand the variety of services provided to our clients and to be more efficient and competitive in the market.”