At the end of July, Gunvor Group and GE Capital launched a EUR 225m factoring program for Gunvor's receivables portfolio to finance part of Gunvor's German refining business. The deal is a part of Gunvor's broader strategy to diversify its financing base while reducing liquidity risk throughout its businesses.

"By freeing up trade finance lines, we are creating more liquidity and more opportunity. So instead of just getting a bigger gas tank, factoring makes our financing engine more efficient," said Gunvor's Chief Financial Officer Jerome Schurink. Gunvor is one of the first trading houses to establish a factoring programme as a way to diversify how its supports its operations.

Gunvor believes that the advantages of this approach include:

• allowing them to diversify away from traditional financing sources
• being quicker than securitization programs, which they believe bear some liquidity risks in uncertain times
• the cost of financing is based on the receivables rather than on the seller itself
• financing can be arranged without any recourse and will not dilute existing lenders' position.

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This deal represents the largest single receivable finance programme in Germany. The question it raises is: Is factoring about to have a resurgence and dominate other types of receivables finance, even for large deals? Certainly, many other companies want to diversify their financing and reduce liquidity risk.