Factoring Services Market In-Depth Research On Basis By Category (Domestic, International), By Type (Recourse, Non-Recourse), By Financial Institution, By End-use, By Region, And Segment Forecasts, 2023 - 2030

 

San Francisco, 30 January 2024: The 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

The global factoring services market size is expected to reach USD 7,005.90 billion by 2030 and expand at a significant CAGR of 9.2% from 2023 to 2030. The remarkable growth can be attributed to the rise in open account trading and cross-border business, and the expansion of the manufacturing industry in Asian countries such as China and India is expected to boost the growth of this market. Besides, the need of startups and Small & Medium Enterprises (SMEs) for an alternative source of finance propels the demand in this market. Additionally, the implementation of technological advancements such as Blockchain and distributed ledger will improve the overall supply chain process by reducing operational costs and enhancing security across the system.

A rise in demand for factoring services can be seen due to its ability to customize depending upon the client’s requirement unlike bank loans, the factoring services are based on the current value of the sales ledger and not on historic management information. Factoring does not result in an increase in liability, as it is a transaction of sale and not a loan. A few factors, including archaic regulations, foreign currency restrictions, continued usage of stamp duty tax, and traditional laws restricting the right of assignment, might slow down the growth for a short period. However, several service providers are observed to utilize the latest technologies to overcome such problems.

The factoring services providers such as Eurobank, Société Générale S.A., REV Capital, and Tradewind Finance are adopting various business strategies to improve their services portfolio and attract potential business clients. For instance, in April 2022, Eurobank Factors, a subsidiary of Eurobank, unveiled new improvements to its factoring and launched new digital reverse factoring services. The bank’s new digital reverse factoring services are aimed at assisting clients in improving their cash flow ratio and providing clients with a loyalty scheme on lenient terms. The new services would aid the bank in expanding its customer base for factoring services in the EMEA region.

The increasing need for alternative sources of financing for micro and small & medium enterprises is driving market growth. Several organizations are taking advantage of Machine Learning (ML), Natural Language Processing (NLP), and Artificial Intelligence (AI), which are expected to generate profitable growth prospects for factoring services during forecast period. COVID-19 pandemic is expected to introduce a more collaborative approach, wherein banks and Supply Chain Finance (SCFs) would work together to provide benefits to the client ecosystems.

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The increasing automation in financial services helps financial institutions to simplify their operations and optimize their credit collection process by automating repetitive and time-taking backend tasks. Furthermore, automation helps implement resources for value-added projects and improve the credibility of financial institutions. With the help of automation solutions, financial institutions have improved their operation processes, specifically accounts receivable processes. Account receivable solutions can integrate with various technologies, such as automation, Artificial Intelligence (AI), and machine learning throughout the credit cycle, which helps the institutions deal with the crisis effectively.

Factoring Services Market Report Highlights

• The international market is expected to witness considerable growth of CAGR of 9.8% over the forecast period. This is due to the rapid growth of trade among emerging economies such as China, India, and Thailand which are exporting products to other developing countries
• The non-recourse segment is expected to grow considerably during the forecast period with a CAGR of 9.6%, as the non-recourse service providers perform thorough credit evaluations and offer credit protection against bad debts. Additionally, many large enterprises collaborate with factoring firms to offload their account receivables and clean up their balance sheets, which will help this segment grow further
• The bank segment accounts for the highest market share in 2022 and throughout the forecast period. The growing cross-border transactions and adoption of mobile-based payment channels are anticipated to propel the segment growth over the forecast period. Market players such as Punjab National Bank, SBI Global Factors Ltd., and Deutsche Factoring Bank are adopting mergers & acquisitions, and partnerships to upgrade their products and gain a competitive advantage in the market
• The healthcare segment is anticipated to grow with a considerable CAGR of 10.5% over the forecast period. Slow payments are very common across the healthcare industry which hinders expansion and makes it tough to cover expenses, thus, numerous healthcare firms depend on factoring services providers. Additionally, healthcare factoring firms provide advanced payments for third-party payers (Medicaid, Medicare, or private insurance), and offer support to cover the lease cost of equipment, these factors will further boost the growth of the healthcare industry
• The Asia Pacific market is expected to grow with the fastest CAGR of 11.5%, owing to infrastructural and industrial growth in the region. Additionally, India and China, the world’s most densely populated countries are present in the Asia Pacific region where the demand for factoring services is higher among SMEs

Several Business-to-Consumer (B2C) transactions and other payment methods such as cheques are being replaced with electronic alternatives. This is driving the demand for automation of accounts receivable. Furthermore, digitizing accounts receivable processes helps reduce printing costs and ensures more profits for employees. Several enterprises prefer on-premise deployment of accounts receivable solutions as it provides complete control over the infrastructure and assets. Moreover, it provides complete control over business and transaction records. Organizations in the healthcare and BFSI sectors prefer this type of deployment, as these verticals deal with critical data related to income and healthcare. These factors are likely to spur the demand for automation in the factoring services market.

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. 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 market growth. Businesses often must wait for customers to pay which affects cash flow, thus, to remediate this delay, factoring companies offer upfront cash in exchange for account receivables, which makes factoring services more preferable. Businesses can reduce credit risk and acquire working capital loans with factoring services.

Factoring Services Market Report Scope

Report Attribute	Details
Market size value in 2023	USD 3,733.88 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

Low-profit margin and rising digital threats such as viruses, ransomware, spyware & Distributed denial of service (DDoS) attacks are expected to affect market growth over 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, are developing security solutions with Artificial Intelligence (AI) to help financial organizations facilitate safe & secure factoring services. These solutions enable automated threat detection, unauthorized access identification, and remediation, reducing efforts and time of IT professionals to track malicious activities, techniques, and tactics.

List of Key Players in the Factoring Services Market

• altLINE (The Southern Bank Company)
• Barclays Bank PLC
• BNP Paribas
• China Construction Bank Corporation
• Deutsche Factoring Bank
• Eurobank
• Factor Funding Co.
• Hitachi Capital (UK) PLC
• HSBC Group
• ICBC China
• Kuke Finance