Factoring in Morocco: turn your client invoices into cash

Factoring is based on assigning receivables. You sign a framework contract with a factor (Maroc Factoring, Attijari Factoring, a bank), which first analyzes your clients' strength. Then, for each invoice issued to an approved client, you assign it to the factor: it immediately advances most of the amount — typically 80 to 90% — often within 24 to 48 hours. The factor then handles collection at maturity. When your client pays, the factor pays you the balance, less its commissions. You thus turn a 60- or 90-day term into near-immediate cash, while delegating receivables management.

This is the key question about default risk. In recourse factoring, the factor advances funds but you remain liable if the client doesn't pay: it will then ask you to repay the advance. It's cheaper, because the factor doesn't take the credit risk. In non-recourse factoring, the factor assumes the client's insolvency, generally backed by credit insurance: if your client defaults, you keep the advanced money. It's more protective but more expensive, and the factor will be selective about which clients it guarantees. The choice depends on your exposure: if you rely on a few large clients, non-recourse secures your business.

Factoring suits companies that invoice other businesses or administrations (B2B), with deferred payments — not cash sales or retail B2C. In practice: services, trading, industry, subcontracting, construction, transport, exporters. The factor looks less at your own balance sheet than at your clients' quality: they're the ones who will pay. So a young, growing SME, even without a long history, can be eligible if it sells to creditworthy clients. Conversely, if your clients are fragile or very scattered, the factor will be more cautious. The minimum turnover varies by factor, with some now also serving small structures.

The cost combines two elements: the factoring commission, which pays for management and collection (often 0.3 to 2% of the invoice amount), and the financing commission, the cost of the cash advance, close to a short-term credit rate. To judge worthwhileness, compare this cost to the benefits: cash freed immediately, no more chasing, fewer defaults, the ability to seize opportunities or negotiate supplier discounts thanks to available cash. Many SMEs find the cost of factoring is largely offset by the end of cash tensions and the admin time saved. Always ask for an annualized total-cost calculation on your real volume.

It depends on the formula. In classic "notified" factoring, your clients are informed that the invoice has been assigned and that they must pay the factor directly: it's transparent and the standard in Morocco. Some fear it signals fragility, but factoring is now a widespread management tool, including at large companies, and no longer carries the negative connotation of the past. There are also confidential (non-notified) formulas where the client isn't informed and keeps paying you, but they are rarer and reserved for solid profiles. If the client relationship is sensitive, discuss the confidential option with the factor.

A bank overdraft is a capped cash facility, granted based on your file, that doesn't grow mechanically with your activity and can be reduced by the bank. Factoring, by contrast, is backed by your invoices: available cash naturally increases when your turnover rises, making it an excellent tool for a growing SME. Moreover, factoring includes collection management and, optionally, default protection — which an overdraft doesn't offer. In return, it requires a sufficient volume of B2B invoices and some formalism. Many companies combine both: an overdraft for occasional surprises, factoring to structurally finance the receivables.