Global Factoring Services Market 2024-2031

Factoring Services Market Size, Share & Trends Analysis Report by Type (Recourse and Non-Recourse), by Category (Domestic and International), by Provider (Banks and Non-Banking Financial Institutions (NBFC)), and by End-User (Manufacturing, Transport & Logistics, Information Technology, Healthcare, Construction, and Others (Staffing Agencies, Advertising, and Oilfield Services)) Forecast Period (2024-2031)

Factoring services market is anticipated to grow at a CAGR of 9.0% during the forecast period (2024-2031). Factoring is acquiring accounts receivable or invoices from a company at a reduced price to address the company's short-term liquidity requirements while also profiting the buyer. Furthermore, it includes debt factoring, invoice finance, asset-based lending, and accounts receivable funding. It is a common method for businesses to support cash flow by selling reduced invoices to third parties. Furthermore, these services are offered by banks or independent financial service providers.

Market Dynamics

Growth of international trade is driving the market growth

As international trade grows, corporations transact with companies situated in other nations. Currency fluctuations, political and economic volatility, and foreign legal and regulatory systems all contribute to increased complexity. Factoring companies offer a range of trade finance options designed to meet the unique needs of global trade. These possibilities include import factoring, which gives importers the money to pay for goods ahead of time, enabling them to bargain for better terms with foreign suppliers, and export factoring, which assists exporters in receiving prompt payment for their goods upon shipment.

Increasing demand for alternative financing solutions among small and medium-sized enterprises (SMEs)

Globally, increasing demand for alternative financing solutions among SMEs is a critical driver for the market. SMEs find it challenging to be eligible for standard bank loans because they don't have a long history of success. By acquiring accounts receivable at a discounted rate, factoring services assist SMEs in producing quick cash flow. To assist SMEs in receiving early payments for their bills, providers of factoring services are introducing cutting-edge factoring platforms. For instance, in July 2023, RXIL Global IFSC Limited unveiled a game-changing International Trade Finance Services (ITFS) platform in collaboration with FaMe TN, a government initiative by the Government of Tamil Nadu for MSMEs. This revolutionary launch marks the start of a remarkable journey that will transform the way exporters, importers, and bankers engage in their trade transactions. It will also facilitate Indian MSMEs to get early payments against export invoices through the ITFS.

Market Segmentation

Our in-depth analysis of the global factoring services market includes the following segments by type, category, provider, and technology:

• Based on type, the market is sub-segmented into recourse and non-recourse.
• Based on category, the market is bifurcated into domestic and international.
• Based on the provider, the market is augmented into banks and NBFCs.
• Based on end-users, the market is sub-segmented into manufacturing, transport & logistics, information technology, healthcare, construction, and others.

Recourse Factoring Segment is Projected to Emerge as the Largest Segment

Based on the type, the global factoring services market is sub-segmented into recourse and non-recourse. Among these, the recourse sub-segment is expected to hold the largest share of the market. The primary factor supporting the segment's growth includes various benefits offered by it such as lower fees, flexibility on advanced rates, and flexibility on credit requirements, among others, driving segment growth. Recourse factoring services are popular among businesses with creditworthy invoice clients seeking the lowest discounts and maximum payment for their invoices due to lower factor fees.

Banks Sub-segment to Hold a Considerable Market Share

Banks are well-known financial institutions that have a solid reputation as a brand and a long history. These increase the trust of businesses looking for safe and reputable factoring services. Due to banks' extensive branch networks and established customer base, firms can easily reach out to new customers and offer integrated solutions, such as factoring services and other financial products. Banks are implementing several strategies to offer a comprehensive suite of factoring services. For instance, in August 2023, Exim Bank, an export financier launched India Exim Finserve (IFSC) Private Limited, its subsidiary to offer a wide range of trade finance products to Indian exporters with a major focus on export factoring. The company will provide a range of services for Indian exporters, focusing on export factoring with a combination of receivables financing, accounts receivable servicing, and coverage of non-payment risk.

Regional Outlook

The global factoring services market is further segmented based on geography including North America (the US, and Canada), Europe (UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia), and the Rest of the World (the Middle East & Africa, and Latin America).

Asia-Pacific countries to invest in factoring Services

• China's economies are rapidly shifting from agrarian to manufacturing and export-oriented economies, supporting the growth of factoring services.

Global Factoring Services Market Growth by Region 2024-2031

Source: OMR Analysis

Europe Holds Major Market Share

Among all the regions, Europe holds a significant share owing to the growing focus of transport companies on export business factoring and emerging start-ups in factoring services from countries such as the UK, Germany, Italy, Romania, and Sweden. The European Union's substantial expenditures in factoring services for small and medium-sized businesses, as well as organizations in the manufacturing and engineering industries, are making a substantial impact on enhancing market growth. This region's service providers are concentrating on automating the process through the use of cutting-edge technology like Blockchain, which offers sophisticated data security and smart contract capabilities.

Additionally, The European Union (EU) aggressively promotes factoring knowledge through the EU Federation and a legislative framework that allows its implementation. This provides a secure and predictable environment for both businesses and factoring organizations. Factoring services significantly aid SME finance by providing working capital, improving cash flow management, and reducing credit risk, with Europe's mature industry utilizing sophisticated financial infrastructure.

Market Players Outlook

Note: Major Players Sorted in No Particular Order.

The major companies serving the global factoring services market include BNP Paribas Group, China Construction Bank., Deutsche Factoring Bank, HSBC Group, Mizuho Financial Group, Inc., and Barclays, among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers, and acquisitions to stay competitive in the market. For instance, in March 2023, FINAMCO and Tradewind Finance (Germany), one of the leading trade finance service providers, entered into a partnership to improve factoring services for Colombian enterprises. The partnership aims to provide affordable, efficient financing to Latin American businesses, aiming to establish Tradewind as a viable alternative lender in a region with limited access to trade finance.

The Report Covers:

• Market value data analysis of 2023 and forecast to 2031.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the global factoring services market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying 'who-stands-where' in the market.