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International Trade and Forfaiting Association

ITFA

ITFA brings together banks and financial institutions who are engaged in originating and distributing trade related risk and finding creative ways to mitigate risks.

Lobbying Activity

Response to Revision of EU rules on late payments (Late Payments Directive)

9 Nov 2023

The International Trade and Forfaiting Association (ITFA) supports the European Commissions goal of protecting SMEs from abusive payment behaviour of large buyers. Upon analysis of the Commissions proposal, ITFA believes that certain provisions seem to go against the Commissions objective while also introducing obstacles to the establishment of a robust, sustainable and benign environment for working capital in the European Union. These are: (1) the proposed uniformity of payment terms capped at thirty days without regard for the underlying value creation chain and, (2) the lack of distinction between negotiated commercial terms on the one hand and abusive late payment behaviour on the other. In addition, it is worth underlying how the current 30 days payment term applicable to governmental organisation is not ensuring a timely fulfilment of payment of obligations. In this context it must me pointed out that a non-negotiated late payment (abusive late payment) has a much worse impact on the working capital management of a corporation than pre-agreed payment terms, which can easily managed through various solutions available for SMEs as well as Large Corporates. If the 30 days payment term will become applicable to all commercial intra-EU transactions it may widen the problem of the delays already existing for governmental organisations. This would also increase considerably the administrative burden related to the follow up, penalties and other obligation. Some background is helpful. According to the study commissioned by DG FISMA published in 2020 written by VVA/Aite, the European market in 2018 for different forms of working capital such as factoring, receivables discounting and payables finance (often called reverse factoring) was 1 633.5 billion or 10 % of the EUs GDP. Receivables discounting amounted to 481.6 billion and payables finance 84.3. The amounts of working capital provided have risen significantly since then. It is noteworthy that the SCF industry was called on to provide significant additional liquidity for working capital during the initial pandemic period including allowing corporate buyers to extend payment terms without harming their suppliers and that the industry responded very successfully to this call. The above observations are laid out in further detail in the attached letter and can be addressed through targeted amendments to the proposal. ITFA is preparing draft language to that end.
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Response to European Digital Identity (EUid)

3 Sept 2020

The International Trade and Forfaiting Association (ITFA) is grateful for the opportunity to express the initial views related to the planned eIDAS review. We believe that the eIDAS review presents an excellent opportunity to consider various aspects that can help boost international trade. The digitalisation of commercial documents used in international trade is important for trade parties as it reduces operational risks and linked costs - the technology exists but the law needs to catch up. If we can achieve this goal, the documents can be used more widely and become more liquid. The exporters and other companies involved in supply chain financing will be the ultimate beneficiaries. Thanks to that, supply chain financing will become more affordable for companies, particularly for MSMEs. Consequently, the digitalisation of these documents could be considered a building block to support MSME financing. The digitalisation of trade documents would also help to make regulatory supervision more efficient and effective as it facilitates the use of digital platforms. This is critical for customs and other public authorities involved in trade. To achieve that, we would propose some amendments to the eIDAS framework. Namely, we would like to suggest that the future framework would (i) consider both paper form and electronic form of the documents and (ii) fully recognise the benefits of the simple electronic signature. Please see attached the presentation with background information and elaborated arguments.
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