According to a recent report by Reports and Data, the global factoring services market was valued at USD 1.6 billion in 2022, and is projected to have a revenue CAGR of 8.5% over the forecast period. 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. This type of financing is becoming increasingly popular among small and medium-sized enterprises (SMEs) that face challenges in obtaining finance from traditional lenders like banks.
Effective management of cash flow is essential for businesses to operate efficiently, and factoring services are in demand as they enable businesses to convert their accounts receivable into cash, which in turn helps them maintain their cash flow. The market for factoring services is expanding due to increased adoption by SMEs and the trend of digitization, which has led to the development of digital platforms to simplify factoring operations and offer faster services to businesses while reducing costs.
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, making it less expensive than non-recourse factoring.
Driving Factors of Factoring Services Market
The factoring services market is being driven by several factors, including:
- Increased adoption by small and medium-sized enterprises (SMEs): Factoring services are becoming increasingly popular among SMEs that face challenges in obtaining finance from traditional lenders like banks.
- Effective management of cash flow: Factoring services 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.
- Digitization: The trend of digitization has led to the development of digital platforms to simplify factoring operations and offer faster services to businesses while reducing costs.
- Merger and acquisition activity: Factoring services provide a fast and efficient way for organizations to access the capital they need for MA deals.
- Recourse factoring: 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 and is particularly advantageous for businesses with lower credit risks.
- Transportation industry: The transportation industry is expected to be the most lucrative sector due to the recurring problem of delayed payments from customers, which often creates cash flow constraints for transportation businesses.
- European market: 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, as well as emerging startups from countries like the United Kingdom, Russia, Sweden, Italy, and Germany.
- Asia Pacific market: The market in Asia Pacific is expected to contribute significantly to the revenue over the forecast period, particularly due to the swift growth of the manufacturing industry in Southeast Asia and India.
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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.
The transportation industry is expected to be the most lucrative sector due to the recurring problem of delayed payments from customers, which often creates cash flow constraints for transportation businesses.
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, while the market in Asia Pacific is expected to contribute significantly to the revenue over the forecast period, particularly due to the swift growth of the manufacturing industry in Southeast Asia and India.
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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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