^{Through the FCI two-factor system, specialist financiers can help smaller businesses access working capital, manage overseas payment risks and participate in international trade.}

IFS Capital Singapore CEO Renchun Zeng highlighted how cross-border factoring can help micro, small and medium-sized enterprises (MSMEs) maintain access to working capital and manage payment risks during periods of trade disruption at a webinar organised on 21 October 2026 under the OECD Southeast Asia Regional Programme (SEARP).

The webinar, Navigating the Business Resilience Cycle and Advancing Economic Security in the New Global Risk Landscape, brought together representatives from international organisations, financial institutions and the private sector to examine how Southeast Asian businesses can respond to external shocks and strengthen their resilience.

Speaking during the session on working capital, Renchun explained how longer shipping routes, rising operating costs and extended payment terms are placing additional pressure on smaller businesses. These challenges can be particularly acute for MSMEs with limited collateral or credit histories, which may restrict their access to conventional bank financing.

He highlighted how factoring can help address this gap by providing financing against eligible trade receivables, allowing businesses to access working capital before their customers settle outstanding invoices.

Connecting Businesses Across Borders Through the FCI Two-Factor System

A key focus of Renchun's presentation was the FCI two-factor system. FCI, formerly known as Factors Chain International, is the global representative body for factoring and the financing of open-account domestic and international trade receivables. It connects factoring institutions across more than 90 countries through an international network that facilitates cooperation on cross-border transactions.

Under the two-factor system, an export factor works with the seller in its home market, while an import factor operates in the buyer's market. The export factor provides financing to the exporter, while the import factor supports local buyer assessment, payment collection and credit protection under the agreed arrangement.

This arrangement helps address two challenges faced by smaller exporters: obtaining working capital while waiting for overseas customers to pay, and managing payment risks in markets where they may lack local knowledge.

“Through the FCI network, we were able to help an SME with no collateral that sells across borders obtain upfront cash and protection against payment risk,” Renchun explained during the webinar.

To illustrate how the system works, Renchun shared an example involving a Singapore SME trading electronics and lifestyle products with buyers in Japan.

In this transaction, IFS Capital acted as the export factor, providing financing to the Singapore exporter against its receivables. The receivables were assigned to a Japanese import factoring partner, which supported the assessment of the overseas buyer and facilitated payment collection. The buyer was notified of the assignment as part of the transaction arrangements.

Upon shipment, IFS Capital was able to advance 80% of the invoice value to the exporter, giving the business access to working capital from day one rather than having to wait several months for payment. When the invoice fell due, the Japanese buyer paid through the import factor, which then remitted the funds to IFS Capital to settle the transaction between the two factors.

The arrangement also provided protection against non-payment arising from the buyer's prolonged payment default or insolvency. Under the agreed terms, the import factor was required to pay IFS Capital within 90 days of the invoice due date in such circumstances.

The collaboration demonstrated the value of the FCI network in providing local market support. The Japanese partner also visited the buyer in person, giving IFS Capital access to insights into the buyer and the local market that would have been difficult to obtain from Singapore alone.

Supporting Imports into ASEAN Through Regional Import-Factor Services

In addition to providing export factoring services that help MSMEs in the region obtain working capital for transactions with foreign buyers, IFS Capital also provides import factoring services in Singapore, Malaysia, Thailand and Indonesia.

In these markets, IFS Capital works with overseas export factors to support international exporters selling to buyers in ASEAN. Its import factoring services include buyer credit assessment, credit cover and local collections, subject to the terms and approved limits of each transaction.

For an exporter based outside the region, working with an import factor can provide access to local knowledge of buyers, payment practices and collection procedures. It can also provide credit protection against approved buyer risks, helping exporters extend open-account payment terms with greater confidence.

This regional capability complements IFS Capital's export factoring services by supporting transactions in both directions: helping ASEAN businesses obtain financing when selling overseas while enabling international exporters to manage payment risks when selling into ASEAN markets.

By combining its regional presence with the wider FCI network, IFS Capital can connect international factoring partners with local market expertise and support trade flows involving buyers across Southeast Asia.

Expanding Access to Trade Finance for Underserved MSMEs

Beyond the practical example, Renchun called for stronger collaboration between policymakers, development institutions and specialist non-bank financiers to improve MSMEs' access to working capital.

“Most traditional lenders view MSMEs as higher-risk borrowers. They typically don't have hard assets, such as property, to offer as collateral. They don't have as rich a credit history as some of the larger companies, and they often have limited or weaker financial records, making underwriting difficult. In a crisis, these challenges simply intensify the difficulties they already face,” he said.

He highlighted Singapore's approach of allowing eligible non-bank financial institutions to participate alongside banks in government-supported financing schemes. Extending similar risk-sharing arrangements across ASEAN could help reach smaller businesses that fall outside traditional banking criteria.

“Singapore offers a good model through Enterprise Singapore's financing schemes, under which non-bank financiers such as IFS Capital participate alongside banks,” he added.

He also emphasised the importance of strengthening legal and digital frameworks for receivables financing, including clearer rules on the assignment of receivables and mechanisms to reduce the risk of duplicate financing. Such measures could improve confidence among financiers and make it easier for smaller businesses to use their trade receivables to obtain working capital.

As external disruptions continue to affect global trade, access to financing and effective cross-border risk management will remain important for MSMEs seeking to maintain operations and expand into overseas markets.

Through international factoring partnerships and stronger regional cooperation, more businesses could gain access to the financial support needed to participate in cross-border trade.

Learn More About IFS Capital

Discover how IFS Capital supports businesses with tailored trade financing and factoring solutions across Singapore and the wider ASEAN region.

Visit www.ifscapital.com.sg to learn more about our services.