How factoring can solve a company's cash flow problems and ensure its growth | Cristian Ionescu, Instant Factoring

In 2025, Instant Factoring provided €104 million in financing to companies, with €73 million of that in Romania. Seven years after its launch, the Romanian startup now operates in three markets, having added Spain and Serbia to its home base, within a market estimated at €10.5 billion in Romania alone. start-up.ro spoke with Cristian Ionescu, CEO and co-founder of the company, about what factoring is, why entrepreneurs often struggle to understand the product, and how it can drive growth.

Factoring is nothing new. However, until recently, it was a service tailored to very large companies looking to gain better control over their cash flow—perhaps the most critical factor to consider in the entrepreneurial environment.

Factoring is simply invoice financing. As an entrepreneur or a company, when you make a sale and have money to collect, you can either wait two, three, or six months—depending on your payment terms—or you can collect it on the spot. Invoice financing means getting your money now, without waiting, whenever you choose, with total freedom, so that you aren't just profitable on paper, but can actually see that profitability in your bank account, says Cristian Ionescu.

Instant Factoring started with the idea of being a digital-native product in a market dominated by traditional financial institutions. You can set up an account on the platform in two minutes, upload invoices quickly, and within a few hours, entrepreneurs can have financing for that specific receivable. The funds are then received within 24 hours. Following this brief onboarding process, everything is seamless and digital. Each invoice is uploaded and approved.

We have clients who upload invoices while on the go: if they are in the transport business, they might be at a stoplight, scan the invoice, upload it from their phone to the platform, and receive the contract and a notification to sign with a single click. Everything happens from wherever you are, explains Cristian Ionescu.

A service that solves the problem of payment terms

While the services offered by banks were not accessible to small and medium-sized entrepreneurs, digital solutions have begun to address this gap. Instant Factoring is designed specifically for these companies.

In Romania, the average collection time for B2B invoices has reached 75-90 days in the private sector. In the public sector, the situation is even tougher: contractual terms of 60-90 days are often effectively paid in 150-180 days. This creates a gap between the moment of sale and the moment of collection that can stifle any growing business.

There are so many payments, as we all know: salaries, taxes, VAT, and suppliers who won't wait 150 days for you to pay. You need to have the money when you need it. This gap, coupled with the growth in sales for expanding companies, leads to a very high risk. You look great on paper, maybe even profitable, but in reality, your bank account is empty, adds Cristian Ionescu on the start-up.ro podcast.

From emergency fix to management tool

Many entrepreneurs first come to Instant Factoring during a crisis: a promissory note to honor, accounts frozen by the tax authorities, or a large unpaid invoice. However, Cristian Ionescu says the perspective shifts after the first interaction.

Many of them, once they start seeing the benefits for the health of their business, become recurring clients and start planning ahead. We encourage them to think about financing programs based on their client portfolios.

Portfolio data confirms this: in 2024, companies financed by Instant Factoring increased their turnover by 116% compared to the previous year.

Obviously, it’s not our merit, except to the extent that the cash we provided helped them; it’s their entrepreneurial talent, their hard work, and their ideas for entering the market. It’s phenomenal that the portfolio we manage in Romania has more than doubled its turnover.

Furthermore, unlike a bank loan for operational expenses and working capital, factoring does not require collateral or physical assets. This can be a competitive advantage for service companies that don't have solid assets to put on the table for a bank loan.

With factoring, the power dynamic is reversed. It doesn't matter how strong your company is; what matters is how solid your clients are.

You can borrow from the strength of your clients, as long as you have managed to build healthy business relationships with partners who are more solid than you are. You borrow—their strength is transferred to you simply by the fact that you have become their supplier, explains Ionescu.

Additionally, factoring does not increase the company's debt ratio, does not appear on the balance sheet as a liability, and does not block your bank credit line. Also, the average duration of financing through Instant Factoring is about 50 days, which is completely different from the structure of a traditional loan. Thus, after 50 days on average, the invoices are paid to Instant Factoring by the suppliers.

Business growth can be a vulnerability

One of the paradoxes of entrepreneurship is that a growing company can be highly vulnerable, because the desire for expansion, combined with long payment terms, can lead to cash flow bottlenecks.

"Growth means higher sales. When you sell more, you only grow once you collect on those invoices, because you might not actually get paid. That is a clear reality. You sell today and grow upon collection. What does factoring do? You sell today, you collect today, you grow today. That is the big differentiator," says Ionescu.

Another critical moment occurs when a small company starts working with large clients. Big contracts come with longer terms, lower margins, and volumes that you cannot fulfill using current liquidity.

"If you are a small company and you have a single contract with a larger firm, it might represent your turnover for eight months. You would be unable to deliver or fulfill that contract if you didn't have a resource at your disposal, such as the cash solution offered by factoring," adds the CEO of Instant Factoring.

And there is another, less discussed advantage: bargaining power with suppliers. In a sector like agriculture, the difference between paying cash and paying at harvest time can mean a 45% discount. "Access to liquidity can even become a competitive advantage for you as a company."

Two types of factoring

There are two main versions of the product. In recourse factoring, the entrepreneur remains jointly liable with the factoring company for the payment of the invoice: if the client does not pay, the entrepreneur repays the financing. In the non-recourse version, the risk of non-payment is transferred completely.

"The moment I sold the invoice, I also outsourced the collection risk. It's no longer my business. No one can bother me anymore to say: you know, your client didn't pay, you have to pay the money back," says Ionescu.

The cost difference is about 15% higher than the version with risk coverage. "When you explore new markets, you enter into new business relationships where you lack visibility, clarity, and predictability, I think it is very important not to worry that your client will fail to pay their debts."

Instant Factoring is active in Romania, Serbia, and Spain

Instant Factoring chose early internationalization based on a simple premise: the cash flow problem of SMEs is not specific to the Romanian market.

Serbia was the first international move, and Cristian Ionescu describes it as a deliberate test ground, chosen precisely because it was different enough to force the company to learn.

"We couldn't have done Spain if we hadn't learned the lessons we learned during our time in Serbia. We made every mistake that could be made, and even more than that," explains the CEO of Instant Factoring.

Spain came with a market of a completely different scale: 270 billion euros, compared to 10.5 billion in Romania, with a factoring penetration rate of 19% of GDP. The country's population is only double that of Romania, but the market is 27 times larger, a sign of a much better-known and utilized product.

For Instant Factoring, the next target markets would be Portugal, a smaller market but similar to Spain, as well as Latin America, an incredible opportunity, as Cristian Ionescu calls it.

In Romania, the company estimates a total addressable market of 125,000 companies. After seven years, it has reached about 8,000.

"We managed to reach about 7% of companies, but in the meantime, over the last 7 years, about 20,000-30,000 companies have appeared per year. It shows us a bit how the market regenerates and what our potential is in Romania."

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