Factoring Services Market Size, Share, Opportunities, And Trends By Category (Domestic, International), By Type (Recourse, Non-Recourse), By Financial Institutions (Banks, Non-Banking Financial Institutions), By End Users (Manufacturing, Transport & Logistics, Information Technology, Healthcare, Construction, Others), And By Geography - Forecasts From 2023 To 2028
- Published : Oct 2023
- Report Code : KSI061616150
- Pages : 147
The factoring services market is projected to show steady growth during the forecast period.
Factoring services, a form of financial service, present an avenue for businesses to augment their cash flow by selling accounts receivable to a third-party entity, referred to as a factor, at a markdown. Consequently, the factor then undertakes the responsibility of pursuing payments from the business's clientele. This mechanism proves advantageous, particularly for enterprises grappling with limited resources for managing their accounts receivable or those seeking to boost their financial liquidity. The allure of factoring services lies in the access to working capital it provides, obviating the need for collateral or enduring a protracted approval process. It is incumbent upon businesses, however, to meticulously deliberate over the associated costs and conditions of engaging with a factor. These factors might levy charges for their services, and businesses might find themselves obliged to satisfy specific eligibility prerequisites. Moreover, businesses must ensure that the selected factor enjoys a reputable standing and possesses the necessary acumen to efficiently administer their accounts receivable.
The factoring services market is an integral part of the financial sector, catering to businesses in need of liquidating their accounts receivable. This mechanism involves the transfer of such accounts to a third-party entity, commonly referred to as a factor, at a reduced rate. Consequently, the responsibility of collecting the owed funds from the customers is assumed by the factor. Notably, this system is particularly advantageous for businesses seeking to bolster their cash flow and lacking the means to manage their accounts receivable. Furthermore, it facilitates access to working capital sans the necessity for collateral or enduring an extensive approval procedure. The landscape of the global factoring market appears highly decentralized, with its representation spanning across a spectrum of more than 7,000 substantial and well-capitalized global banks, alongside middle-market domestic banks, lending institutions, as well as various online factoring and technology-driven enterprises. Notably, prominent entities contributing significantly to the factoring services industry encompass the likes of China Construction Bank Corporation, Eurobank, ICBC China, Mizuho Financial Group, Inc., Barclays Bank PLC, Deutsche Factoring Bank, BNP Paribas, Hitachi Capital (UK) PLC, and Kuke Finance, among others.
- Increasing demand for alternative sources of financing: The growth of the factoring services market is significantly influenced by various key factors, with the increasing demand for alternative financing sources for small and medium-sized enterprises (SMEs) being at the forefront. As businesses strive to secure sufficient working capital, factoring services emerge as a vital solution, offering quick access to funds without the necessity of providing collateral or undergoing a protracted approval procedure. This accessibility to immediate funds not only aids in managing day-to-day operations but also facilitates the expansion and development of SMEs, fostering their overall financial stability and sustainability. Moreover, by mitigating the risks associated with delayed payments and offering efficient credit management, factoring services play a crucial role in enhancing the financial flexibility and resilience of SMEs in today's competitive market landscape.
- Increase in cross-border trade activities: The rise in globalization and the subsequent increase in cross-border trade activities have significantly bolstered the expansion of the factoring services market. As businesses increasingly participate in global trade, the demand for reliable and efficient international factoring services has become imperative. These services are essential for companies of all scales, spanning various industries, as they provide crucial support in managing the complexities of international transactions and mitigating the risks associated with cross-border trade. Whether operating on a small or large scale, businesses are recognizing the indispensable role played by international factoring services in ensuring smoother and more secure international trade operations.
- Improvement in BFSI Industry: The enhancement of the Banking, Financial Services, and Insurance (BFSI) sector has emerged as a pivotal catalyst driving the burgeoning expansion of the factoring services market. Factoring services, renowned for their cost-effective nature, not only offer substantial financial advantages but also deliver robust insights and comprehensive reporting functionalities. Moreover, their meticulous credit evaluation mechanisms further amplify their appeal, thereby fostering a surge in the appetite for these specialized financial services.
- Technological Advancements: The amplified integration and utilization of advanced technologies such as Machine Learning (ML), Natural Language Processing (NLP), and Artificial Intelligence (AI) are anticipated to foster substantial and lucrative growth opportunities for the factoring services market in the immediate future. The advent of these cutting-edge technologies has significantly enhanced the operational capacities of factoring companies, enabling them to provide more efficient and tailored services to their clients. Notably, these technological advancements have facilitated the development of user-friendly web portals and intuitive applications, empowering customers to conveniently access and navigate their accounts while obtaining prompt and comprehensive responses to frequently asked questions.
- Strategic partnerships and mergers and acquisitions: In the dynamic landscape of the financial industry, market players are increasingly prioritizing strategic partnerships and pursuing mergers and acquisitions as key tactics to establish robust connections with both existing and potential clients. This concerted effort aims to not only foster stronger client relationships but also to effectively expand their market shares. Consequently, this concerted industry-wide approach has precipitated a notable consolidation within the realm of factoring services, whereby a select group of prominent entities has come to exert significant influence and dominance over the sector, effectively shaping the competitive landscape.
Products offered by key companies:
- Altline offers invoice factoring services that can help businesses improve their cash flow by providing immediate access to cash, even if their customers have not yet paid their invoices. Invoice factoring can help businesses reduce their risk by transferring the risk of non-payment to the factoring company.
- ICBC domestic factoring allows businesses to have immediate access to cash, even if their customers have not yet paid their invoices. It also helps to increase their sales by allowing them to offer their customers more attractive payment terms.
Prominent growth in the domestic segment within the factoring services market:
There is a substantial role of the domestic segment in propelling growth within the factoring services market. It is evident that the domestic sector significantly contributes to the overall expansion of the factoring services market. The swift integration of factoring receivable methods in key industries owing to their efficacy has notably bolstered the domestic segment's growth trajectory. This trend underscores businesses' acknowledgment of the advantageous attributes of factoring services, leading to an upsurge in their utilization for augmenting cash flow and effectively managing working capital. By providing businesses with periodic assessments of sales and payable invoices, domestic factoring enables improved management of accounts receivable, thereby nurturing the growth of the domestic segment. It is worth noting that the popularity of domestic factoring extends across regions such as Asia Pacific, Africa, and South America, signifying a global trend rather than a localized phenomenon. Overall, the burgeoning growth of the domestic segment within the factoring services market is a result of businesses' increasing adoption of these services, the consolidation of the domestic factoring market, and the widespread embrace of domestic factoring across diverse geographical regions.
The Asia Pacific region is expected to hold a significant share of the factoring services market:
The Asia Pacific region is projected to hold a substantial portion of the factoring services market, underscoring its vital role in the overall expansion of this market. Particularly, the robust growth of the manufacturing sector in countries like India and other South & and Southeast Asian nations has provided a strong impetus to the progress of factoring services in this region. This, in turn, points towards the fact that the burgeoning factoring services market in the Asia Pacific region is being propelled by the escalating requirement for alternative financing options within the manufacturing sector. Furthermore, this signifies that the Asia Pacific region stands as a pivotal force behind global economic growth and development, a factor that is poised to further drive the advancement of the factoring services market within the region. Notably, the limitation in accessing finance has emerged as a significant impediment to the growth of SMEs in emerging markets, ranking as the second most commonly cited obstacle faced by SMEs in their expansion endeavors within these markets and developing nations. Consequently, the escalation in the demand for alternative financing sources for SMEs has been a primary driver behind the growth of the factoring services market in the Asia Pacific region. Additionally, the surge in open account trading has propelled the international factoring services segment to expand further, with importers in developed nations increasingly considering factoring as a favorable substitute for traditional methods of trade finance. As a result, the escalation in the demand for international factoring services has played a substantial role in the growth of the factoring services market within the Asia Pacific region.
- In January 2022, FundThrough, a financial technology company that helps growing businesses improve their cash flow by offering fast invoice payments, acquired BlueVine, a fintech company that provides online banking and financing to small and medium-sized businesses.
- In October 2021, HSBC India and HSBC UAE completed a live blockchain-enabled trade finance transaction between ArcelorMittal Nippon Steel India Limited (AM/NS India) and Universal Tube & Plastic Industries Ltd. (UAE).
- By Category
- By Type
- By Financial Institutions
- Non-Banking Financial Institutions
- By End Users
- Transport & Logistics
- Information Technology
- By Geography
- North America
- United States
- South America
- United Kingdom
- Middle East and Africa
- Saudi Arabia
- Asia Pacific
- South Korea
- North America
1.1. Market Overview
1.2. Market Definition
1.3. Scope of the Study
1.4. Market Segmentation
1.7. Base, and Forecast Years Timeline
2. RESEARCH METHODOLOGY
2.1. Research Data
2.2. Research Process
3. EXECUTIVE SUMMARY
3.1. Research Highlights
4. MARKET DYNAMICS
4.1. Market Drivers
4.2. Market Restraints
4.3. Porter’s Five Force Analysis
4.3.1. Bargaining Power of Suppliers
4.3.2. Bargaining Power of Buyers
4.3.3. Threat of New Entrants
4.3.4. Threat of Substitutes
4.3.5. Competitive Rivalry in the Industry
4.4. Industry Value Chain Analysis
5. FACTORING SERVICES MARKET BY CATEGORY
6. FACTORING SERVICES MARKET BY TYPE
7. FACTORING SERVICES MARKET BY FINANCIAL INSTITUTION
7.3. Non-Banking Financial Institutions
8. FACTORING SERVICES MARKET BY END USERS
8.3. Transport & Logistics
8.4. Information Technology
9. FACTORING SERVICES MARKET BY GEOGRAPHY
9.2. North America
9.2.1. United States
9.3. South America
9.4.1. United Kingdom
9.5. The Middle East and Africa
9.5.1. Saudi Arabia
9.6. Asia Pacific
9.6.4. South Korea
10. COMPETITIVE ENVIRONMENT AND ANALYSIS
10.1. Major Players and Strategy Analysis
10.2. Market Share Analysis
10.3. Mergers, Acquisitions, Agreements, and Collaborations
11. COMPANY PROFILES
11.1. altLINE (The Southern Bank Company)
11.2. Barclays Bank PLC
11.3. BNP Paribas
11.4. China Construction Bank Corporation
11.5. Deutsche Factoring Bank
11.7. Factor Funding Co.
11.8. Hitachi Capital (UK) PLC
11.9. HSBC Group
11.10. ICBC China
11.11. Kuke Finance
11.12. Mizuho Financial Group, Inc.
altLINE (The Southern Bank Company)
Barclays Bank PLC
China Construction Bank Corporation
Deutsche Factoring Bank
Factor Funding Co.
Hitachi Capital (UK) PLC
Mizuho Financial Group, Inc.
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