The global factoring services market size was USD 1.6 Billion in 2022 and is expected to register a revenue CAGR of 8.5% over the forecast period, according to the latest report by Reports and Data.
Factoring services refer to a financing method where businesses sell their outstanding receivables to a financial institution at a discounted price to receive immediate cash. In times of economic uncertainty, businesses seek working capital loans to maintain their cash flow and liquidity. Factoring services provide a means to quickly obtain cash to pay for expenses such as suppliers and employee wages. The market for factoring services is expanding due to increased adoption by small and medium-sized enterprises (SMEs). These businesses often face challenges in obtaining finance from traditional lenders like banks, especially if they have a poor credit history or lack collateral. Factoring services offer an alternative financing option that allows businesses to access quick and affordable cash.
Effective management of cash flow is essential for businesses to operate efficiently. Factoring services are increasingly in demand as they enable businesses to convert their accounts receivable into cash, which in turn helps them maintain their cash flow. As a result, businesses are able to manage their finances more effectively and sustain their operations.
The factoring services market is experiencing growth due to the increasing trend of digitization. Factoring organizations are developing digital platforms to simplify their operations and offer faster services to businesses while reducing costs. Furthermore, the demand for factoring services is rising due to an increase in merger and acquisition activity, particularly in the healthcare and technology industries. Factoring services provide a fast and efficient way for organizations to access the capital they need for MA deals. These factors are expected to drive revenue growth in the factoring services market in the projected period.
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Some of the prominent players in the global factoring services market include Citigroup Inc., HSBC Group, JPMorgan Chase Co., Mizuho Financial Group, Inc., MUFG Bank, Ltd., Deutsche Bank AG, BNP Paribas Factor, Factoring Company S.p.A., Wells Fargo Company, Industrial and Commercial Bank of China Limited.
Some Key Highlights from the Report
- During the forecast period, the category of recourse factoring is expected to generate the highest revenue. Recourse factoring is a type of service in which the seller remains responsible for paying the debt if the buyer fails to pay. This service is less expensive than non-recourse factoring because the seller assumes the risk of non-payment by the buyer. This type of factoring is particularly advantageous for businesses with lower credit risks as it enables them to access funds quickly and conveniently. Furthermore, because they are directly involved in the process, firms have greater control over debt collection when using recourse factoring. These factors are projected to boost the segment's revenue growth during the forecast period.
- Over the forecast period, the transportation industry is expected to be the most lucrative, primarily due to the recurring problem of delayed payments from customers, which often creates cash flow constraints for transportation businesses. To overcome these challenges, many firms in the transportation sector may benefit from using factoring services to obtain quick cash loans against their outstanding payments. This would enable them to maintain their operations smoothly without having to worry about cash flow issues. These are some of the factors that are expected to drive the growth of the transportation segment's revenue.
- The European market is projected to dominate the global market in terms of revenue share due to the rise in export businesses and transportation investments. Additionally, the market is being driven by emerging startups from countries like the United Kingdom, Russia, Sweden, Italy, and Germany. The implementation of advanced technology and stricter security regulations are also increasing demand for factoring services across various industries.
- The market in Asia Pacific is expected to contribute significantly to the revenue over the forecast period. The swift growth of the manufacturing industry in Southeast Asia and India is likely to propel the revenue growth in this area. These factors are anticipated to accelerate the revenue expansion in this market region.
- In August 2021, BNP Paribas Factor and Greensill partnered to improve their supply chain finance services for Small and Medium-sized Enterprises (SMEs). The aim of the collaboration is to offer factoring solutions to SMEs that are part of the Greensill supply chain finance network.
- In March 2021, Wells Fargo formed a partnership with E2open, a start-up that specializes in supply chain management software. The goal of this collaboration is to offer factoring services to Wells Fargo's clients, allowing them to manage their receivables and finance needs through a single solution.
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For the purpose of this report, Reports and Data has segmented the global factoring services market on the basis of Type Outlook, Industry Outlook, and Regional Outlook:
Type Outlook (Revenue, USD Billion; 2022 - 2032)
- Resource Factoring
- Non-Resource Factoring
Industry Outlook (Revenue, USD Billion; 2022 - 2032)
- Transportation
- Manufacturing
- Healthcare
- Construction
- Others
Regional Outlook (Revenue, USD Billion; 2019-2032)
- North America
- U.S.
- Canada
- Mexico
- Europe
- Germany
- U.K.
- France
- Italy
- Spain
- Sweden
- BENELUX
- Rest of Europe
- Asia-Pacific
- China
- India
- Japan
- South Korea
- Rest of APAC
- Latin America
- Brazil
- Rest of LATAM
- Middle East Africa
- Saudi Arabia
- UAE
- South Africa
- Israel
- Rest of MEA
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