PETALING JAYA: The Malaysian Micro Business Association (Mamba) today urged the government and financial ecosystem players to expand access to fund factoring and invoice financing solutions.
This call aims to protect the cash flow of micro, small, and medium enterprises amid an increasingly challenging global economic environment.
Mamba secretary-general Alvin Low Wei Yan said liquidity constraints have emerged as a primary barrier hindering growth among Malaysian MSMEs. This is particularly acute for those in sectors where long credit terms and delayed payments are standard practice.
“Micro-businesses and small enterprises often deliver products and services upfront but only receive payment 60 to 120 days later. This significant waiting period creates immense strain, making it difficult to cover operational costs like salaries, replenish inventory, or seize new business opportunities,” said Low.
“Factoring provides immediate access to earned revenue, bridging this critical cash flow gap. For many, this can be the determining factor between sustaining operations and facing closure.”
Recent industry data underscores the severity of this issue. According to a 2025 report from Experian Malaysia, the average payment delay for SMEs is 64 days, with the gap widening to as much as 26 days between SMEs and their corporate clients in sectors like transport and logistics. “These persistent cash flow strains are a leading cause of business failure,” said Low.
Low noted that while Malaysia has made progress in micro-financing, the awareness and adoption of factoring services remain critically low, especially among micro-entrepreneurs and suppliers to large corporations and government-linked companies (GLC). This represents a significant missed opportunity, as the MSME sector is a cornerstone of the Malaysian economy.
“Malaysia’s MSMEs contribute over 38% to the national GDP and employ more than seven million people. Their ability to not just survive but to scale directly impacts national economic stability and growth,” Low emphasised.
“The current MSME funding gap in Malaysia is estimated to be US$21.5 billion (RM90.30 billion), according to 2024 data from the SME Finance Forum. Factoring is a powerful and underutilised tool to address this gap.”
Factoring also presents a compelling opportunity for investors, offering a resilient and performance-based asset class. Unlike traditional lending, which relies on collateral and credit history, factoring is secured against the value of a business’s accounts receivable. This model unlocks working capital based on real business performance.
“By improving cash flow, MSMEs can build resilience, retain talent, invest in technology, and take on larger contracts, driving sustainable growth,” Low explained.
“For investors, factoring is a viable and resilient asset class as it translates into a secure, short-term, and self-liquidating investment that supports the real economy.”
The potential for growth in this sector is substantial. The Southeast Asia factoring market was valued at US$140.7 billion in 2024 and is projected to expand at a compound annual growth rate of 7.1% to reach US$279.4 billion by 2033, according to IMARC Group’s South East Asia Factoring Market Report.
However, in Malaysia, only an estimated 3% of market receivables are currently captured by the factoring industry, highlighting a significant opportunity for expansion, citing AFS Alliance’s Factoring Market Research.
Mamba is calling for a stronger multi-stakeholder collaboration involving the Ministry of Finance, Bank Negara Malaysia, financial institutions, alternative financiers and major supply chain leaders to expand access to factoring solutions for micro and small businesses. This includes promoting fair payment terms across supply chains, introducing education and outreach initiatives to increase awareness of factoring as a viable financing tool and asset class, and encouraging digital platforms that can streamline invoice verification and accelerate financing approvals.
“Cash flow is the lifeline of every MSME,” Low emphasised.
“Enhancing access to factoring is not just a form of financial support – it is a strategic investment in Malaysia’s grassroots economy, fostering entrepreneurship, securing jobs, and unlocking a stable and profitable asset class for the investment community.”
