Egypt – The Financial Regulatory Authority (FRA) has required factoring companies to verify invoices eligible for factoring through an electronic system designated by the authority, as part of its efforts to improve efficiency in the non-banking financial sector, strengthen governance and transparency standards, and reduce the risk of double lending.
This measure is based on FRA Decision No. 51 of 2026 and is aimed at preventing multiple factoring transactions from occurring for the same receivable (invoice). The system also allows invoices to be electronically “frozen” in favor of the factoring company for the duration of the loan agreement.
The authority, in partnership with e-finance, launched the digital factoring system in early February through its official online portal.
The first phase of the system will allow factoring companies to electronically query invoices and see if they have previously been financed. This will be achieved through integration with relevant government agencies, particularly the Ministry of Finance and the Egyptian Tax Authority.
Factoring is a short-term financing mechanism in which a company sells invoices or deferred receivables to a third party (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 (finance company).
The decision further obliges factoring companies to include in the contract signed with the seller a clause confirming that the security interest created on the granted funds is registered in the chattel security register, in accordance with the provisions of Law No. 115 of 2015 regulating security interests in movable property. This requirement aims to protect the rights of financial institutions and strengthen the legal position of all contracting parties.
The second phase of the integrated electronic system will see a complete digital transformation of the factoring process, from invoice validation to accounts receivable settlement, helping to streamline procedures, reduce processing times and reduce operational costs.
The decision will be published in Al Waqai Al Masriya newspaper and on the FRA’s official website and stipulates that it will come into force the day after publication, giving companies sufficient time to adjust their positions in line with the new requirements.
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