Though a relatively recent financial tool for Greece, factoring, the transfer of collection rights for firms’ receivables in return for direct liquidity, has promising potential as it mainly targets small and medium-sized enterprises, which represent 90 percent of Greek enterprises. Of these, only 8 percent opt for factoring as a source of finance, compared to an EU average of 11 percent. The sector’s business grew 230 percent in the 1996-2001 period and market circles project it to grow from about 3.5 billion euros last year to 5 billion in 2004. The great leap forward occurred in 2000, when turnover grew 113 percent to 1.25 million euros and pretax profits shot up 88 percent to 15 million. «Factoring is expected to show high growth rates in coming years. The chief reasons that will push firms to use factoring are risk management, ridding oneself of the cost of management and the falling trend in the number of post-dated checks issued for transactions between businesses. Factoring also provides potential for improving balance sheets,» says Fanis Panayiotopoulos, credit manager at National Bank of Greece, which also provides factoring services. According to Cyprus Factors, the industry will receive a strong impetus in coming years as a result of Olympic projects, the inability of many businesses to effectively manage their circulating assets during periods of high growth, and the peculiarity of the Greek market which is characterized by long payoff periods, allowing only limited possibilities for small and midsized firms to finance growth through liquid assets. Also, the growth of banking facilities in the EU and the single market provide more opportunities for Greek factoring firms to expand business. Factoring services may be divided into four main types: domestic, importing, exporting and discounting of invoices. Factoring’s main advantages are as follows: Liquidity is boosted right after delivery of orders. The factor’s large data bank ensures careful examination of the data of each client and the recipients of orders may be notified in good time. It considerably reduces the level of uncollected current assets and the risk involved. It indirectly contributes to sales growth through freeing up human resources. It improves the picture of a firm’s balance sheet by reducing the debt burden, and, finally, cuts management and accounting expenses.