GVR Report cover Factoring Services Market Size, Share & Trends Report

Factoring Services Market Size, Share & Trends Analysis Report By Category (Domestic, International), By Type (Recourse, Non-recourse), By Financial Institution, By End-use, By Region, And Segment Forecasts, 2023 - 2030

  • Report ID: GVR-4-68039-178-0
  • Number of Pages: 150
  • Format: Electronic (PDF)
  • Historical Range: 2018 - 2021
  • Industry: Technology

Report Overview

The global factoring services market size was valued at USD 3,566.99 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 9.2% from 2023 to 2030. The increasing need for alternative sources of financing for micro and small & medium enterprises is driving the growth of the market. Several organizations continue to take advantage of Machine Learning (ML), Natural Language Processing (NLP), and Artificial Intelligence (AI), which are expected to generate profitable growth prospects for the factoring services during the forecast period. The COVID-19 pandemic is expected to introduce a more collaborative approach, wherein banks and Supply Chain Finance (SCFs) firms are expected to work together to provide benefits to the client ecosystems. The factoring services industry is expected to shift towards digital documentation, with cloud-based and AI-based models improving the efficiency of services post-pandemic creating robust factoring services market opportunities.

 U.S. factoring services market size, by type, 2020 - 2030 (USD Billion)

Growing public awareness regarding developments in financial technology, such as government and factoring group lobbying and activities, cryptocurrency, increasing international trade, and widespread usage of digital platforms are some key factors driving the market growth. Businesses often have to wait for customers to pay which affects the cash flow, thus, to remediate this delay, factoring companies offer upfront cash in exchange for account receivables, which makes factoring services referable.

Businesses can reduce credit risk and acquire working capital loans with factoring services. Finance, Competitiveness, and Innovation (FCI) Global Practice is taking a series of steps to boost awareness, including hosting workshops to explain the relevance of factoring to government officials and other key stakeholders. It continues to support the establishment of effective assignment legislation, third-party rights safeguards, and the promotion of good governance to create a robust legal and regulatory environment to develop a solid legal infrastructure.

As a result, in April 2022, FCI launched the Edifactoring 2.0 platform, an online platform to support the two-factor business model for members of FCI through a set of Electronic Document Interchange (EDI) messages. The platform runs on FCI’s legal structure and helps to overcome the challenges in cross-bordering factoring.

Since factoring businesses serve a variety of industries; their pricing and levels of customer service can offer differentiated products depending on the end-user’s requirements. Moreover, the ability to complete the process and provide advance payment within 24-72 hours makes the service faster than bank loans. However, new technologies are assisting factoring companies in providing better customer service by offering consumers access to web portals and applications to review and respond to frequently asked inquiries about their accounts.

Low-profit margin and rising digital threats such as viruses, ransomware, spyware & Distributed denial of service (DDoS) attacks are expected to affect the factoring services market growth over the forecast period. Several organizations have incurred significant losses in terms of unplanned workforce reduction, brand reputation, revenue, and business disruptions due to data breaches.

Several cybersecurity companies, such as Cyber X, Inc. and Palo Alto Networks, continue to develop security solutions with Artificial Intelligence (AI) to help financial organizations in facilitating safe & secure factoring services. These solutions enable automated threat detection, unauthorized access identification, and remediation. This is essential for businesses looking to reduce the efforts and time of IT professionals to track malicious activities, techniques, and tactics. 

Category Insights

The domestic segment accounted for the largest market share of over 70% in 2022. The segment growth can be attributed to the rapid adoption of the factoring receivable methods in major industries due to their effectiveness. Furthermore, the increasing significance of electronic invoices has contributed to the consolidation of the domestic factoring market. Domestic factoring provides businesses with a weekly or monthly analysis of sales and payable invoices. Additionally, easy risk coverage and low cost provided by the domestic segment in comparison with international factoring allow this segment to attain a larger market share.

The international factoring services are anticipated to register considerable growth with a CAGR of 9.8%during the forecast period. International factoring services are essential for firms engaging in international trade; irrespective of size and the industry they deal with. A rise in open account trading has pushed this segment to grow further, also the importers in developed countries consider factoring, a favorable alternative to conventional methods of trade finance. Besides, growth in international trade awareness and a shift of production facilities especially after the outbreak of COVID-19 from China to other economies such as Vietnam, Mexico, and the Philippines continue to boost the growth of this segment.

Type Insights

The recourse factoring segment is expected to hold the largest market share of over 52% during the forecast period. The recourse factoring requires a personal guarantee of the owner to maintain liquidity in case of bad debt and to purchase back nonperforming accounts receivable taken as collateral by factor. The recourse factoring segment offers various benefits. These include lower fees, flexibility on advanced rates, and flexibility on credit requirements, among others. These benefits remain the primary drivers of the segment’s growth. The recourse factoring services are used by firms with creditworthy invoice clients who want to sell their invoices at the lowest discounts. The fact that firms pay smaller factor fees and receive the maximum money possible for invoices. This is responsible for the widespread adoption of the segment among businesses.

The non-recourse factoring segment is expected to showcase substantial growth with a CAGR of 9.6% during the forecast period, as developing, nations are increasingly adopting non-recourse factoring services. The non-recourse factoring offers complete credit security to businesses which is the key factor responsible for driving growth. Non-recourse factoring can be a good option for businesses with a large customer base, as businesses may want to clean up their balance sheet by offloading their accounts receivable. In the case of non-recourse factoring, the factoring firm bears liability for bad debts. Thus, they have more stringent credit requirements. Additionally, non-recourse factoring is widely used among truckers, as they often work with limited budgets and expect greater financial security when it comes to payments.

Financial Institution Insights

The bank segment held the largest market share of over 80% in 2022. Banks, the major financing organizations worldwide, are also anticipated to show considerable growth during the forecast period. Bank factoring firms use the same steps as traditional factoring firms. However, they are regulated by banks, which means no intermediary is involved leading to lower factoring costs which is one of the key factors for the development of this segment. In addition, banks are investing resources in advanced technologies such as Distributed Ledger Technology (DLT) and Blockchain to meet their client’s financial needs, which will further support the growth of this segment. Factors such as direct access to cash, additional security from the regulated financial entity, and more competitive rates will drive the growth of this segment.

The non-banking financial institution segment is anticipated to show considerable growth of 10.5% over the forecast period. The growth can be attributed to the flexibility and transparency that non-banking financial institutions are offering to their clients. Non-banking financial institutions increasingly adopt the latest technologies to compete with banks.

For instance, RTS Finance, one of the top invoice factoring companies for trucking, offers web browser apps and mobile apps for better integration with their platform. Truckers can track the status of the transaction and avail of various benefits such as fuel card discounts, no hidden costs such as automated clearing fees, and invoice upload fees.

End-use Insights

The manufacturing segment accounted for the largest market share of over 30% in 2022. The manufacturing segment uses factoring services as it enables manufacturers to negotiate early-pay discounts and take advantage of bulk order incentives. Most companies in the manufacturing sector are seasonal, which means they are slow for many months of the year and rely heavily only on a few months, it leads to poor cash flow and vast fluctuations in the business, and to avoid this, manufacturing firms rely on factoring services. A few other advantages of factoring services include high advance rates, volume-based factoring fees, and elimination of payment gaps, which are likely to drive the growth of this segment.

 Global factoring services market share, by end-use, 2022 (%)

The healthcare segment is expected to register a CAGR of 10.9 over the forecast period. The healthcare industry relies on factoring services due to the multiple benefits it can offer such as medical insurance claims can be paid within 72 hours instead of the usual 30 to 120 days. Factoring services are used in several medical businesses.  

These include laboratory services, ambulatory services, health centers & hospitals, home health agencies, nurse staffing agencies, rehabilitation centers, medical equipment providers, and medical billing & transcription service providers. Companies such as US MED Capital, eCapital, Inc., Alleon Healthcare Capital, Xynergy Healthcare Capital LLC, and PRN Funding, Inc. offer specialized healthcare factoring services to hospitals and pharmaceutical companies.

Regional Insights

Europe accounted for the major market share of over 55% in 2022 owing to the growing focus of transport companies on export business factoring. Emerging start-ups continue to line up for factoring services from countries such as the U.K., Germany, Italy, Romania, and Sweden. Considerable investments by the EU in factoring services for small & medium enterprises and companies operating in the manufacturing and engineering sectors are significantly contributing to improving the market growth.

Many service providers in this region remain focused on automating the process by utilizing advanced technologies such as blockchain, which provides advanced data security and smart contract functionality. It is one of the crucial factors supporting the factoring services industry growth in the region.

Factoring Services Market Trends by Region

The Asia Pacific region is expected to witness considerable growth with a CAGR of 11.5% over the forecast period owing to the expansion of the manufacturing sector in economies such as India and other Southeast Asian countries. Their economies are rapidly shifting from agrarian to manufacturing and export-oriented economies, supporting the growth of factoring services in the region.

Moreover, the Asia Pacific region is home to a large number of developing economies, such as China, Thailand, India, and the Philippines, which are getting investments from developed markets that are saturated and exploring new opportunities in the region. In Asia Pacific, SMEs comprise more than half of all enterprises, and small & medium enterprises often look for monetary support to run their businesses smoothly.

Key Companies & Market Share Insights

The key players operating in the factoring services industry include China Construction Bank Corporation, Eurobank, ICBC China, Mizuho Financial Group, Inc., Barclays Bank PLC, Deutsche Factoring Bank, BNP Paribas, Hitachi Capital (UK) PLC, Kuke Finance, among others. Market players are focusing on strategic partnerships, mergers & acquisitions. Companies continue to actively engage with existing and new clients, to increase their respective market share. They are also aggressively investing in advanced technologies such as distributed ledger and blockchain activities to gain a competitive edge in the factoring services market.

For instance, in October 2021, HSBC UAE and HSBC India announced executing blockchain technology enabling live financial transactions for trading purposes between Universal Tube & Plastic Industries Ltd. (UAE) and ArcelorMittal Nippon Steel India Limited (AM/NS India). The entire end-to-end paperless transaction was carried out through the blockchain-enabled Contour platform, which is interfaced with essDOCS’ CargoDocs platform. Some prominent players in the global factoring services market include:

  • Barclays Bank PLC

  • BNP Paribas

  • China Construction Bank Corporation

  • Deutsche Factoring Bank

  • Eurobank

  • Hitachi Capital (UK) PLC

  • HSBC Group

  • ICBC China

  • Kuke Finance

  • Mizuho Financial Group, Inc.

Factoring Services Market Report Scope

Report Attribute

Details

Market size value in 2023

USD 3,773.88 billion

Revenue forecast in 2030

USD 7,005.90 billion

Growth rate

CAGR of 9.2% from 2023 to 2030

Base year for estimation

2022

Historical data

2018 - 2021

Forecast period

2023 - 2030

Quantitative units

Revenue in USD billion and CAGR from 2023 to 2030

Report coverage

Revenue forecast, company ranking, competitive landscape, growth factors, and trends.

Segments covered

Category, type, financial institution, end-use, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; Germany; U.K.; France; Italy; China; India; Japan; Singapore; Mexico; Brazil;Chile

Key companies profiled

China Construction Bank Corporation; Deutsche Factoring Bank; Barclays Bank PLC; BNP Paribas; Hitachi Capital (UK) PLC; Eurobank; HSBC Group; ICBC China; Kuke Finance; Mizuho Financial Group, Inc.

Customization scope

Free report customization (equivalent up to 8 analyst working days) with purchase. Addition or alteration to country, regional, and segment scope

Pricing and purchase options

Avail customized purchase options to meet your exact research needs. Explore purchase options

 

Global Factoring Services Market Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global factoring services market report based on category, type, financial institution, end-use, and region:

  • Category Outlook (Revenue, USD Billion, 2018 - 2030)

    • Domestic

    • International

  • Type Outlook (Revenue, USD Billion, 2018 - 2030)

    • Recourse

    • Non-recourse

  • Financial Institution Outlook (Revenue, USD Billion, 2018 - 2030)

    • Banks

    • Non-banking Financial Institutions

  • End-use Outlook (Revenue, USD Billion, 2018 - 2030)

    • Manufacturing

    • Transport & Logistics

    • Information Technology

    • Healthcare

    • Construction

    • Others (Staffing Agencies, Advertising, Oilfield Services, And Commercial Food & Beverages)

  • Regional Outlook (Revenue, USD Million, 2018 - 2030)

    • North America

      • U.S.

      • Canada

    • Europe

      • Germany

      • U.K.

      • France

      • Italy

    • Asia Pacific

      • China

      • India

      • Japan

      • Singapore

    • Latin America

      • Brazil

      • Mexico

      • Chile

    • MEA

Frequently Asked Questions About This Report

gvr icn

GET A FREE SAMPLE

gvr icn

This FREE sample includes market data points, ranging from trend analyses to market estimates & forecasts. See for yourself.

gvr icn

NEED A CUSTOM REPORT?

We can customize every report - free of charge - including purchasing stand-alone sections or country-level reports, as well as offer affordable discounts for start-ups & universities.

Contact us now to get our best pricing.

esomar icon

ESOMAR certified & member

D&B icon

Leading SME award by D&B

We are GDPR and CCPA compliant! Your transaction & personal information is safe and secure. For more details, please read our privacy policy.

great place to work icon