Since 2019 Lebanese companies have operated with almost no bank credit. Overdrafts, discounting lines and documentary credits that once financed the trade cycle have largely disappeared, and many sound businesses now pay suppliers in advance while waiting 60 to 120 days to be paid by their own customers. The gap is financed out of owners' pockets or not at all, and orders are refused because the company cannot carry the receivable. The constraint is not the quality of the business; it is the absence of a lender willing to stand between the sale and the collection.
Factoring addresses that gap directly. The factor buys the invoice at a discount and is repaid by the buyer, so the seller's cash rises while its leverage does not. Because the decision rests on the creditworthiness of the buyer, insured by a credit insurer, a company whose own balance sheet is impaired by the crisis can still finance sales to strong customers abroad. The same mechanism works in reverse for importers: a supplier is paid promptly while the buyer settles on deferred terms, without a letter of credit.
Through Levant Trading Solutions and the Lebanon Trade Finance Support Fund, Orion offers export factoring, reverse factoring for raw-material imports, and supplier finance, each backed by credit insurance on the buyer. The objective is a repeatable, documented facility rather than a one-off discount: a programme that grows with the client's order book, reports cleanly to auditors and lenders, and gives exporters the ability to offer the payment terms that international buyers expect.
A factoring programme follows a disciplined sequence that mirrors the practice of international factors and credit insurers. Timings are indicative and depend chiefly on the speed of buyer underwriting and the completeness of the seller's documentation.
The stages below describe a typical mandate and reflect best practice in the market. Every engagement is scoped to the case at hand: stages may be combined, re-ordered, shortened or omitted, and timings depend on the company, its counterparties and the regulatory setting.
Establish whether the seller, its products and its trade flows are suitable for factoring.
The programme begins with the seller: legal standing, ownership, know-your-customer and sanctions checks, financial statements, the nature of the goods or services, and the history of sales and collections by buyer. The factor looks for clean, undisputed receivables arising from completed deliveries, not from progress billing, consignment or contra arrangements with related parties. Screening early avoids the most common failure in factoring, which is discovering after weeks of work that the receivables cannot legally or practically be assigned, or that a large share of sales is to affiliates whose invoices no insurer will cover.
Identify which buyers and invoices can be financed, and on what terms.
Each buyer is assessed on its own merits: identity, country, payment history with the seller, concentration in the portfolio and the dilution history, meaning credit notes, returns and disputes that reduce what is ultimately collected. Payment terms, contractual prohibitions on assignment and set-off rights are read in the underlying contracts. This review separates the receivables that a factor can buy from those it cannot, and sets realistic expectations before an insurer is approached. It avoids the pitfall of building a programme on one or two dominant buyers whose concentration later caps the facility or exposes the seller to a single default.
Obtain an insured credit limit on each buyer that the factor will rely on.
For every eligible buyer, a credit-limit application is submitted to the credit insurer, which underwrites the buyer's capacity to pay and grants, reduces or declines a limit. The insurance policy is then structured so that its benefit is assigned to, or held for, the factor, with the insured percentage, waiting period, maximum credit period and claims procedure clearly stated. Best practice is to read the policy conditions as carefully as the limit itself: exclusions for disputed invoices, late notification of overdues or shipments outside the policy period are the usual reasons a claim fails.
Put the legal transfer of receivables and the rights of each party on a sound footing.
The factoring agreement sets out the purchase price, advance rate, fees, recourse terms, warranties on each invoice, events of default and the treatment of disputes. A notice of assignment is delivered to each buyer, instructing payment to the factor's collection account; in international transactions the buyer's acknowledgement is obtained wherever possible. The approach follows FCI and UNCITRAL practice on the assignment of receivables. Its purpose is to make the factor's title to the receivable enforceable against the buyer and third parties; an unnotified or poorly documented assignment leaves the factor exposed to payments made to the wrong account.
Establish the documentary standard every financed shipment or invoice must meet.
Operational onboarding defines what the seller submits for each transaction: commercial invoice bearing the assignment legend, transport documents, proof of delivery, and any certificates required by the buyer or the insurer. Reporting formats, cut-off times and the reconciliation of the seller's ledger with the factor's are agreed. Clear documentation is what turns an invoice into an asset a factor can fund in hours rather than days. The pitfall it avoids is funding on the strength of an invoice alone, without evidence that the goods were delivered and accepted.
Advance cash promptly against each eligible invoice within the approved buyer limits.
Once an invoice and its supporting documents are verified, the factor pays the advance, typically between 70% and 90% of face value depending on dilution, credit period and insurance cover. The balance, less discount and fees, is released when the buyer pays. The availability under each buyer limit is tracked continuously, so that the seller knows before shipping whether the next invoice can be financed. Advancing within limits and against verified documents, rather than on the seller's total sales, keeps the facility aligned with real, collectable trade and prevents overfunding that later has to be clawed back.
Collect from buyers at maturity and keep the seller's and factor's records aligned.
Buyers pay into the factor's account at maturity. Each receipt is matched to its invoice, the reserve is released to the seller and any shortfall is investigated at once. Overdues are followed up with the buyer, and the insurer is notified within the deadlines set by the policy, so that cover is preserved. Prompt reconciliation is what distinguishes a sustainable programme from one that accumulates unexplained balances, and timely overdue notification is the single most important protection of the insurance claim.
Adjust the programme to the seller's order book and the buyers' current credit standing.
The programme is reviewed periodically and whenever a buyer's circumstances change. Limits are increased for buyers who pay well and whose volumes grow, reduced or withdrawn where the insurer's view deteriorates, and new buyers are underwritten as the seller wins business. Pricing, advance rate and recourse terms are revisited against actual dilution and collection experience. A standing review keeps the facility proportionate to real trade and avoids the two opposite failures of factoring: a programme that cannot follow the client's growth, and one that continues to finance a buyer whose credit has quietly weakened.
In factoring the risk is primarily on the party that pays the invoice. A sound programme is built on independent underwriting of each buyer and on credit insurance, not on the seller's collateral. This is what allows a company whose own balance sheet has been impaired by the crisis to finance sales to creditworthy customers.
Under recourse factoring, the seller repays the advance if the buyer fails to pay, so the credit risk stays with the seller. Under non-recourse factoring, the factor, usually backed by credit insurance, bears the buyer's insolvency or protracted default, while the seller remains liable for disputes and defective goods. The choice affects pricing, accounting treatment and leverage, and must be stated precisely.
Every financed receivable should be evidenced by delivery documents, carry an assignment legend and be covered by a notice to the buyer. Enforceable title protects the factor against misdirected payments and competing claims, and it supports the insurance claim. Shortcuts here are the usual cause of losses in otherwise sound programmes.
Limits per buyer, per country and as a share of the portfolio prevent a single default from overwhelming the facility. Advance rates are set against observed dilution, so that credit notes, returns and disputes are absorbed by the reserve rather than by the factor or the seller's cash flow.
Sales ledgers, buyer lists and pricing are among a company's most sensitive information. Orion treats them under strict confidentiality, shares them only with the factor and insurer on a need-to-know basis, and never discloses a client's identity, buyers or trade volumes.
Every Orion mandate is conducted under a strict non-disclosure agreement. We do not publish client names, transactions or outcomes, and we never use a client as a reference without written consent. What we can share openly is how we work — and the research on which our advice rests.
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