The Financial Regulatory Authority (FRA) has required factoring companies to verify invoices subject to factoring through the Authority’s designated electronic system, as part of efforts to enhance the efficiency of the non-banking financial sector, strengthen governance and transparency standards, and reduce the risk of double financing.
The measure comes under FRA Decision No. 51 of 2026 and aims to ensure that no more than one factoring transaction is conducted for the same receivable (invoice). The system also allows invoices to be “frozen” electronically in favour of the factoring company for the duration of the financing contract.
The Authority launched the digital factoring system at the beginning of February via its official online portal, in partnership with e-finance.
In its first phase, the system enables factoring companies to conduct electronic enquiries on invoices and verify whether they have previously been financed. This is achieved through integration with relevant government entities, most notably the Ministry of Finance and the Egyptian Tax Authority.
Factoring is a short-term financing mechanism under which companies sell their invoices or deferred receivables to a third party (the factoring company) in exchange for immediate liquidity. A typical factoring transaction involves three parties: the seller, the debtor (the seller’s customer), and the factor (the financing company).
The decision further requires factoring companies to include a clause in contracts signed with sellers confirming that the security right created over the granted finance has been registered in the Movable Collateral Registry, in accordance with the provisions of Law No. 115 of 2015 regulating security rights over movable assets. This requirement is intended to safeguard the rights of financing entities and reinforce the legal standing of all contracting parties.
The second phase of the unified electronic system will involve the full digital transformation of the factoring process, from invoice verification to the settlement of receivables, helping to streamline procedures, reduce processing times, and lower operational costs.
The decision stipulates that it will be published in Al-Waqa’i’ Al-Masriya and on the FRA’s official website, and will enter into force on the day following its publication, granting companies adequate time to regularise their positions in line with the new requirements.