The global factoring services market size is expected to reach USD 5,973.9 billion by 2028, registering a CAGR of 8.4%, from 2021 to 2028, according to a new study by Grand View Research, Inc. The growth can be attributed to the increasing number of open trade accounts, the expansion of businesses in the Asian market, mainly led by China, the rise in cross-border factoring, and the rapid development of factoring services across the European Union. Moreover, the increasing need for an alternative source of financing for Small and Medium Enterprises (SMEs) has also been driving the market growth. Additionally, the implementation of blockchain technology in factoring solutions is likely to help improve the overall supply chain by reducing operational costs for businesses.
Several factors are likely to impede the demand for factoring in emerging markets, including archaic regulations hindering the growth of receivables purchase programs, such as the continued use of stamp duty tax, laws limiting the rights of assignment, and foreign currency restrictions. However, the development of receivables registries is increasing to safeguard from fraud/scam or factoring rules that can guard the industry against unfair regulations. However, the increasing focus of regulators on data management and extensive adoption of real-time payments networks are expected to help in reducing complexities in trade finance. The increased demand for drafting proper laws to govern factoring transactions, such as the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Secured Transactions, is also expected to boost the market in the coming years.
Furthermore, the rising implementation of digital platforms in trade financing and increasing cross-border trade activities are expected to drive market growth during the forecast period. However, the COVID-19 pandemic has resulted in travel bans, quarantines, lockdowns, flight cancellations, and increased panic among people, adversely affecting industries and sectors globally. However, the factoring market is expected to rebound gradually in the short as well as the long term.
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In terms of category, the international segment is expected to register the highest CAGR over the forecast period. This can be attributed to the increasing demand for factoring services from developing nations that focus on increasing their international trade through exports and imports
In terms of type, the non-recourse segment is anticipated to register the highest CAGR of 8.7% over the forecast period. Advantages such as full credit cover offered by the financing company are driving the demand for non-recourse factoring amongst SMEs across the world
In terms of financial institution, the non-banking financial institution segment is anticipated to register the fastest CAGR from 2021 to 2028. The growth of fintech companies and non-banking financial startups, owing to lenient ease of government regulations in some developing countries, is the prime factor propelling the growth of the segment
In terms of end use, the healthcare segment is anticipated to register the highest CAGR over the forecast period. Insurance-related complications and delays in medical bill payment of medical companies or professionals due to bureaucracy in the payment process are likely to accelerate the demand for factoring services in the segment over the forecast period
In terms of region, Asia Pacific is anticipated to emerge as the fastest-growing regional market owing to the rapid growth of economies vis-à-vis infrastructural and industrial growth in the region. The region comprises two of the world’s most populated countries, China and India, where the demand for factoring services is higher among SMEs. Moreover, China is the key exporter of electronic components, chemical materials, and many other industrial products
Grand View Research has segmented the global factoring services market based on category, type, financial institution, end-use, and region:
Factoring Services Category Outlook (Revenue, USD Billion, 2018 - 2028)
Factoring Services Type Outlook (Revenue, USD Billion, 2018 - 2028)
Factoring Services Financial Institution Outlook (Revenue, USD Billion, 2018 - 2028)
Non-Banking Financial Institutions
Factoring Services End-use Outlook (Revenue, USD Billion, 2018 - 2028)
Transport & Logistics
Factoring Services Regional Outlook (Revenue, USD Billion, 2018 - 2028)
List of Key Players in the Factoring Services Market
Barclays Bank PLC
China Construction Bank Corporation
Deutsche Factoring Bank
Hitachi Capital (UK) PLC
Mizuho Financial Group, Inc.
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