Arnulf Romann, CEO and co-founder of efcom, discuss this remarkable evolution and the role of technology in reshaping the receivables landscape, coinciding with efcom’s silver jubilee, celebrating a quarter century in the industry.

Mahika Ravi Shankar (MRS): Arnulf, when you co-founded efcom in 2000, what was the vision behind it? How did you imagine efcom would fit into traditional financing networks given the landscape 25 years ago?

Arnulf Romann (AR): Our idea was to create a standard software for the factoring landscape, which, at the time, was largely an uncharted and fragmented landscape. Early on, especially here in Southwest Germany, we realised that every factoring company operates differently. Still, we remained committed to the idea of a standard solution. We developed numerous parametrisation modules that allow us to create a tailor-made suite for each client, whilst they still use the same standard software.

In the past, a lot was done manually by the factors. There was considerable pressure to optimise operations, and this was also one of our goals.

MRS: Would you say there’s been a turning point in the last 25 years of factoring and receivables, or have changes been more incremental?

AR: Changes have been gradual, mainly because the need for such a product has existed for thousands of years. Trade finance has been done over centuries under different names; factoring has existed for a long time already.

Yet, factoring was in the shadows. Nobody knew about it. But in recent years, it’s come out of the shadows and into the light, since it’s a product which is helping trade financing. Since this is essential for the economy, the product is considered extremely attractive and has gained a strong foothold in some countries.

MRS: Could you talk me through the journey of cross-border factoring? And would you say the fact that efX is now tapped into the Indian market is emblematic of a more globalised factoring ecosystem?

AR: By its nature, trade isn’t confined domestically: it is necessarily cross-border. Factoring companies want to help them. But the difficulty with cross-border factoring lies in distinct and conflicting legal frameworks, making interoperability near impossible. Therefore, the system can only help to handle businesses within certain legal frameworks. 

A bit about our cross-border journey: We became the market leader in Germany by 2002; by 2014, we were represented in nine countries across Europe; and by 2022, we had begun rolling out our global sales strategy. It is in this light that efX, our cloud-based factoring software, was adopted in India by 2024.

While the factoring market in Europe is mature, other markets are growing across Africa, Asia, North America, and South America. With our extensive experience in this industry across Europe, we are well-equipped to support developing countries that may lack this expertise. Our proven system allows us to provide valuable guidance, which is why we’re now expanding internationally. 

MRS: What do you think is the biggest change between the factoring industry now and 25 years ago?

AR: It would have to be digitalisation. In the beginning, the system was manual, and over time we’ve progressively automated many of its functions. In the early stages, we supported human experts, but now the system itself has evolved to take on that expert role. It can make informed decisions, detect fraud, and verify real users. This marks the most significant transformation – shifting expertise from the user to the system itself.

Technology has become essential due to the scale of growth we’ve seen. Initially, our clients processed around 100,000 invoices annually. Today, some handle up to 50 million. At that volume, manual verification is simply no longer feasible. This is where technology plays a critical role. What began as an expert system is now entering a new phase, powered by AI. In this next stage, I assume that AI will detect patterns on its own, patterns that nobody knows about.

MRS: To close, how do you see the industry changing between now and 2050?

AR: This is a tough question, because not only will the factoring business change, but the economy will also change, and this will inevitably influence factoring. If we look to the past and the future, we see all these new factoring products, and I predict this will continue. Sometimes it’s old wine in new bottles, but sometimes these are new ideas. I have no doubt that factoring will exist in 2050, and so will efcom, as long as we continue to innovate, create new solutions, reduce risk, and improve efficiency.

Watch efcom’s anniversary video here!