In a significant move to bolster the integrity of Egypt’s non-banking financial sector, the Financial Regulatory Authority (FRA) has mandated that all factoring companies must verify invoices through a new unified electronic system before granting finance. This new regulation, issued under Decision No. 51 of 2026, aims to enhance governance, increase transparency, and critically, reduce the risk of double financing for the same receivable.
Combating Double Financing Through Digital Verification
The core function of the new system is to prevent a single invoice from being financed by more than one factoring company. By creating a centralized digital ledger, the platform allows factoring firms to conduct electronic enquiries to confirm if an invoice has already been used as collateral.
Furthermore, the system enables the electronic “freezing” of an invoice in favor of the financing company for the duration of the contract, securing their position and providing greater confidence in the transaction. This measure is expected to bring a new level of efficiency and security to the factoring market, a vital source of short-term liquidity for many businesses.
Phased Rollout in Partnership with E-finance
The FRA launched the digital factoring system in early February via its official online portal, developed in partnership with digital payments leader e-finance.
The rollout is structured in two phases. The first phase, which is currently active, focuses on enabling electronic verification. This is achieved through direct integration with key government entities, including the Ministry of Finance and the Egyptian Tax Authority, allowing for real-time checks.
The second phase will see a complete digital transformation of the entire factoring lifecycle, from the initial invoice verification all the way through to the final settlement of receivables. This end-to-end digitalization is projected to significantly streamline procedures, shorten processing times, and lower operational costs for all parties involved.
Strengthening Legal Protections
Beyond the digital platform, the decision also reinforces the legal framework surrounding these transactions. Factoring companies are now required to include a clause in their contracts confirming that the security right over the financed asset has been officially registered in the Movable Collateral Registry.
This step, in accordance with Law No. 115 of 2015, provides a stronger legal standing for the financing entities and safeguards the rights of all contracting parties, further solidifying the factoring process as a reliable financing mechanism.
About The Financial Regulatory Authority (FRA)
The Financial Regulatory Authority is the primary government body responsible for supervising and regulating non-banking financial markets and instruments in Egypt. Its mandate includes ensuring market stability and protecting the rights of stakeholders while encouraging competition and innovation across sectors like capital markets, insurance, private pensions, and financing activities such as mortgage finance, financial leasing, factoring, and microfinance.
Source: Zawya
