A few years ago, Factoring in Colombia was a non regulated activity and its reputation was not very good (in some cases, it was even related with a lack of financial health). These conditions made the development of this product very difficult. In fact, as it is said in Actualícese, less than a 5% of SMEs accesed to this financial tool in 2019.
However, in recent times, and thanks to very important advances at the regulatory level, we can say that in Colombia there has been a turning point in the factoring market, which could experience exponential growth from now on. In fact, a recent report by Factors Chain International indicates that the volume of Factoring operations in Colombia is already close to 5,525 million euros.
One of the essential milestones in this fast evolution has been the recent creation of RADIAN, a platform launched in August 2021. In compliance with Resolution 042 of May 5, 2020 and Resolution 015 of February 11, 2021 of the National Tax and Customs Directorate of Colombia, this tool recorded all the traceability of the actors related to electronic invoicing as a security.
But, when is the electronic invoice considered a security? When it meets all of the following tax and business requirements:
-It has an expiration date.
-It has acknowledgment of receipt of the invoice.
-It has acknowledgment of receipt of goods or services.
-There is express or tacit acceptance of the invoice.
-Complies with the requirements of article 621 of the Commercial Code, article 617 of the Tax Statute and article 11 of Resolution 042 of May 5, 2020.
Once the electronic invoice is considered a security, it is registered in the RADIAN platform, which, as we said, collects the traceability of all the events associated with that security. It is then when it can be transferred through Factoring operations. It means that now Colombian entrepreneurs can have completely legitimate access to new forms of financing, with the peace of mind that all transactions are registered in a public registry.
In fact, according to the newspaper La República, the process of enabling the Electronic Trading Systems in the RADIAN is so demanding at a technological, operational and documentary level, that at the end of October 2021, only four companies had managed to register officially.
We must bear in mind that currently, Factoring in Colombia is not only offered by traditional banks, but also by non-bank financial entities in their online Factoring modality. The Fintech ecosystem (which is the third most important in Latin America) will be deeply benefited thanks to this platform, which will enhance access to Factoring through agile and secure tools.
In any case, the main benefited in the midst of the economic recovery that is beginning to emerge in Colombia, after the setback caused by the pandemic and the lack of liquidity, will be SMEs, which have historically suffered restrictions in accessing commercial financing products, but can now celebrate this process of credit democratization.
Alvantia, a specialist in the development of Factoring and Confirming solutions, with more than 20 years of experience, has seen good opportunities in the Colombian market, where it is currently present with its commercial financing platform.