Challenges

To prevent double assignment, financing and consequently fraud cases.

Primary target

Which group does your product/service primarily target?

Description of Innovation

The purpose of the RRC is to have one platform where all assigned invoices/receivables are posted by the factoring companies and banks to prevent multiple financing of the same receivables while financing mostly SMEs. The unique feature of RRC is that it only records each invoice once, which is important to avoid issues of multiple assignment of the same invoices to banks and other financial institutions. The platform is online and is integrated with the System of Revenue Administration at the Ministry of Treasury and Finance. In addition, the platform verifies the e-invoices that are created from the real trade are valid. Moreover, the RRC provides reporting of all receivables data to the sector. RRC is a system where the assigned receivables subject to factoring and credit transactions are reco

Results

Since its inception in 2015, 36 million documents have been recorded into the Receivables Recording Center by 52 factoring companies and 26 banks, and more than 1.2 million double assignments have been prevented by the end of 2022/03. The Receivables Recording Center has also had a positive impact on the use of e-documents (e-invoice, e-archive, etc.) due to the important role of e-invoice discounting in SME financing. The e-invoice ratio increased from 23% to 95% within seven years.

Lessons Learnt

In Türkiye, all banks including participation/Islamic banks provide trade finance products to their clients. In addition to factoring transactions, other credit transactions, like receivables assignment as collateral and credits against receivables assignment are also recorded to Receivables Recording Center by the banks. Although it is not mandatory to enter transactions other than factoring into the system, several banks also record credit transactions to reduce their credit risks. While designing this ecosystem, all transactions related to trade finance products should be entered the System. Furthermore, to increase the effectiveness and expand the base of our System, the RRC is integrated with some other substantial systems such as the e-Invoice System of the Revenue Administration at the Ministry of Treasury and Finance, Participation (Islamic) Banks Association’s Invoice Recording System, Credit Guarantee Fund’s System, Movable Pledge Registry at the Ministry of Commerce and Trade Chain Finance System launched by our Association.
With all those integrations of complementary systems we created a digital ecosystem which protects the finance sector against fraud (frood); credit and operative risks while increasing SME’s access to finance.

Law on Financial Leasing, Factoring, Financing and Saving Financing Companies with the number of 6361was approved by the Parliament in 2012.
“Central invoice record/Article 43 – Factoring companies and banks consolidate the information concerning the receivables which they took over including invoice information in Risk Center or in a manner that the Association found appropriate. The principles and procedures relating to sharing of the information are determined by the Association.”

In line with the above article 43, as the Association of Financial Institutions we launched the RRC under our Association at the beginning of 2015.
We believe the success of such registries depends on the Regulation and governmental support. They should be obligatory and centralized.
If there are more than one Platform then at least they have to be integrated to each other.