Factoring at the heart of the bank's CSR commitments
Eric Flour, deputy CEO of Societe Generale Factoring in charge of CSR resources and sponsors, explains how factoring, an essential lever of short-term financing for companies, has a strong impact in corporate social responsibility.
As the main source of short-term financing in France, factoring's main purpose is to help companies optimize their cash flow. In the current crisis period, factoring companies play a particularly important role in society, as companies need financing to support the recovery of their activities.
Factoring companies, most notably Societe Generale Factoring, have developed the French state-guaranteed financing of purchase orders, supported by the Ministry of the Economy and Finance. Until December 31, 2020, companies can apply for pre-financing as soon as they submit an order. This is an unprecedented scheme in Europe that will enable companies to save 45 days of cash on average.
In response to the current crisis, Societe Generale Factoring has also implemented various measures to promote the financing of trade receivables for professional and business customers, such as free subscription and reduced commissions.
A CSR offer for all
These one-off measures complement a range of CSR products already available to all our customers.
Since 2007, we have been offering a product that allows associations receiving public aid or grants to anticipate their payment – in 2019, more than €200 million has been financed through this offer.
For the professional market, an innovative 100% dematerialized offer was launched in 2019. From now on, the transmission of invoices and the request for financing can be made via smartphone. Using an application downloaded to their mobile phone, professionals can take photos of their invoices, which are displayed in a pre-filled form. Once this has been validated, they can automatically apply to the factor for financing. This is both an environment-friendly offering – paper is no longer used – and a time-saving solution.
Large companies are seeking to improve their CSR impact and the issue of supplier payment terms is crucial
Finally, Societe Generale Factoring offers reverse factoring to mid-size companies (ETIs in French) and large corporations. This system enables suppliers to large customers to be paid more quickly and on more advantageous terms than if they had directly applied to a factor. Fundamentally, large companies are seeking to improve their CSR impact and the issue of supplier payment terms is crucial in the context of a stagnating economic recovery.
For instance, as part of its supply chain finance programme – for which we are both the platform provider and the financier – Orange wanted to enable the French work-based disabled integration organizations (Établissements et Services d’Aide par le Travail – ESAT) with which it works to benefit from reverse factoring. Thanks to the early payment of invoices – within 48 hours – Orange secures its supply chain, strengthens its commercial relations and builds supplier loyalty. For Orange, and for large groups more broadly, this programme represents a way of being responsible towards smaller companies. In joining forces with the scheme, Societe Generale Factoring has already enabled the first ESAT to benefit from this unprecedented programme, through which they gain secure and privileged conditions to do with access to financing.
Our advisory role
In addition to supply chain finance principles, we also help clients to polish their CSR strategy by defining the environmental and social criteria to be met by their suppliers. Once the specifications are completed, clients can become eligible for early payment of their invoices. A virtuous circle is thus established.
At the same time, on the core activity of invoice financing, Societe Generale Factoring is working on the development of CSR products that would meet certain criteria of the invoicing party in order to determine a bonus/penalty for the price of services.
We are all concerned
Not only is CSR an important issue for our customers, but also for our employees. CSR is one of the major pillars in Societe Generale’s 2020-2025 strategic plan, which is adopted by all business units including the global transaction and payment services unit, to which Societe Generale Factoring is attached. The ongoing search for innovative factoring products with a positive CSR impact is a perfect illustration of this. As is the desire to accelerate the implementation of a common CSR culture within Societe Generale Factoring by raising employee awareness. For example, a new collaborative platform called "Every little bit counts" has been set up. It is accessible to all and it brings together all training courses and provides Q&As and tips to follow in the office every day.
CSR issues, which affect the entire value chain of the company – customers, products and employees – show that economic development is now inseparable from social and environmental progress. Societe Generale Group plays a leading role in this transformation, consistent with our purpose statement: “Building together, with our clients, a better and sustainable future through responsible and innovative financial solutions.”