Case Study - Factoring with the Public Sector

Factoring with the Public Sector



The public sector is known to be one of the largest customers in the economy, however known for the complexity of billing and collection. Public sector entities have big contracts and long list of suppliers, a major buyer stimulating economic growth, employment and local businesses.

Even though doing business with the public sector is very rewarding, it can be very challenging for new or growing companies. SMEs cannot withstand the extended cash cycle, where the company can wait up to 90 days to get paid, their access to liquidity remains strapped to meet their short-term obligations.

The public sector has many projects and suppliers with tight set budgets and procedures to meet, making it difficult as well to extend flexible payment terms.

This mismatch has affected the competitiveness of SMEs in particular, and the public sector strategic focus to support SMEs and sustainable development of local businesses.




Dar Al Tawreeq (DAT) provided the analysis needed for the public entity and after closely assessing the needs of our client. We tailored a factoring program to help manage their working capital requirements, offering tailored factoring and forfaiting programs that support the entity in its long-term projects planning as well as support its supplier network and offer SME support.

DAT factoring solutions provided the capacity for the entity to help SMEs access to liquidity at competitive rates, offering them the ability to factor their receivables ahead of their full payment terms to better match their short-term requirements.

The entity was also able to use the forfaiting solutions to access long-term liquidity needed to better plan future projects and development plans. They can securitize their future cash flows and improve their forecasting and budget plans.



For the SMEs/Supplier:

  • Improve conversion cycle and Days Sales Outstanding (DSO)
  • Cost effective alternative financing for SMEs
  • Collateral free access to cash flow
  • Improved their working capital and ability to forecast
  • Increase asset turnover and profit margins

For the Public Sector Entity :

  • In line with strategic vision and economic objective to support SMEs and growth sustainability for growth and job creation
  • Free extended payment obligations and access to discounts with early payments
  • Improve working capital structure
  • Improve working capital structure
  • Relief stress on budget and better management of cash flows
  • Ability to better forecast and implement future projects with securitization of future cash flows
  • Efficient in operations and standardization in supplier terms, more cost effective internal procedure measures for the government with the provided cloud-based solutions