The Impact of Factoring in Improving Financial Performance of SMEs in Egypt: An Applied Study
Article Sidebar
- Factoring Activity, improving financial performance, Small and Medium Companies
Abstract
Factoring has emerged as a vital financial tool for small and medium-sized companies, as it is one of the tools of modern financial engineering and one of the new sources of alternative financing. It contributes to alleviating cash flow restrictions, supports business growth for these companies, and improves their financial performance., therefore, this study aims to identify the impact of factoring activity in improving the financial performance of small and medium-sized companies in Egypt, through an applied study on a sample of 10 small and medium-sized companies registered on the Nile Stock Exchange and practicing factoring activity. Through analysing the quantitative data of the study, the study concluded that there is an effect of factoring activity in improving the financial performance of small and medium-sized companies in Egypt at a significance level of less than 5%. The study recommended the necessity of expanding factoring activities and adopting them as an alternative financing tool in the companies under study, given the impact of factoring activity in improving all financial performance indicators under study. The study also recommended the need to overcome the obstacles and challenges of using factoring in financing small and medium-sized companies in the Egyptian business environment, as well as building and developing the infrastructure and information necessary for the factoring process and activating the role of the Financial Supervision Authority.
Full text article
References
Abu El-Qomsan, A. A. F. (2017). The impact of factoring activity on the financial leverage of companies. Scientific Journal of Commercial and Environmental Studies, Suez Canal University, 8(4).
Abu El-Qomsan, A. A. F. (2017). The role of factoring as a financing alternative for companies and providing cash liquidity. Scientific Journal of Commercial and Environmental Studies, Suez Canal University, 8(4).
Financial Regulatory Authority (FRA). http://www.fra.gov.eg
Nour, I. I. (2020). Factoring as a financing tool. The Legal Journal (A specialized journal in legal studies and research), Faculty of Law, Helwan University, (2).
Sami, S. (2024, August 7). Text of the Financial Regulatory decision: Factoring regulations after the amendment. Al-Mal Newspaper. https://almalnews.com
African Export - Import Bank AEIB, (2023), Factoring as a Catalyst for Small and Medium Enterprises Development and Intra-African Trade, Asia Pacific Management Review, 17 (3), 301-320. Retrieved from http://apmr.management.ncku.edu.tw.Athanasios. (2024). Evaluating a Model for Default Risk in Non-recourse Factoring, M. Sc Thesis, Greek: University of Piraeus, Journal of Management in Engineering, 27 (3).Hangargi. (2018). Factoring as a Means of Financing the Activities of Small and Medium Enterprises, Journal of Financial Services Marketing, 18 (1).Guenther, J. (2025). Dust Off those Accounts Receivable. Veterinary Economics, 52 (10), Halabi, A. K., Barrett, R. & Dyt, R. (2025). Understanding Financial Information Used to Assess Small Firm Performance. Qualitative Research in Accounting and Management, 7 (2).Hunter, M. G. (2024). Understanding the Common Causes of Small Business Failures: A Qualitative Study. Journal of Applied Management and Entrepreneurship, 16 (1).Jost, T. (2022). Employers and the Exchanges Under the Small Business Health Options Program: Examining the Potential and the Pitfalls. Health Affairs, 31 (2).Mbatha, M. (2022). Risks and Rewards of Providing “Reverse Factoring” as a Financing Technology for Small and Medium-sized Enterprises in South Africa (Doctoral Dissertation). Retrieved from University of Pretoria Electronic Theses and Dissertations, International Financial Law Review, 33 (4).Mthoko, Mbatha. (2021). Risks and Rewards of Providing “Reverse Factoring” as a Financing Technology for Small and Medium-sized Enterprises in South Africa, M. Sc..Norvelis, S. (2024), The Impact of Factoring Activity on the Additional Profits of Companies Operating in the Health Sector, Public Personnel Management, 41 (1).Stanciu. (2023). Factoring: A Modern Alternative of Exogenous Financing and Management of Company Receivables, Management and Economics, Vol. (4), No. (72).Sakorafas L. (2023). Factoring and SME Financing in Latvia: Firm-level Evidence on Profitability, Journal of Finance, 2 (1).Salaberrios, N. (2016). Effects of Using Invoice Factoring (Factoring) for Small Business Financing, Journal of Business Logistics, 34 (2).Shivakumar K. (2025). The Impact of All types of Factoring on the Operating Cycle and Operational Risks in Companies, Entrepreneurship and Regional Development, 23 (3/4).Shaukat, M. (2023). Risk Sharing: An Alternative to Interest-Based Debt Financing. ISRA, International Journal of Islamic Finance, 5 (1).Simmons, S. A., Wiklund, J. & Levie, J. (2024). Stigma and Business Failure: Implications for Entrepreneurs’ Career Choices. Small Business Economics, 42 (3).
Authors
Copyright (c) 2026 The Arab Journal of Administration
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.