June 16, 2024
Factoring Services Market

Factoring Services Market Witnesses High Growth Due to Growing Liquidity Needs of SMEs

The factoring services market allows companies to sell their accounts receivable invoices at a discount in exchange for quick access to working capital by enabling immediate settlement of outstanding invoices instead of waiting to get paid at the end of the credit period. Factoring services provide lucrative benefits like enhanced liquidity management, improved cash flows, reduced risks of debtor defaults or delayed payments. The increasing number of small and medium enterprises relying on debtors’ payments for sustained business operations has augmented growth in the factoring services industry.

The global factoring services market size is estimated to be valued at US$7,347.43 billion in 2024 and is expected to exhibit a CAGR of 7.6% over the forecast period of 2024 to 2031.

Growing liquidity needs of small and medium enterprises has been a key driver for increased adoption of Factoring Services Market Size globally.

Key Takeaways

Key players operating in the factoring services market are 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, Mizuho Financial Group, Inc., RTS Financial Service, Inc., Société Générale S.A., and TCI Business Capital. The key players are focusing on expanding their global presence through strategic mergers and acquisitions. Growing SME sector worldwide has opened lucrative opportunities for established as well as new factoring market players to penetrate regional and international markets. Asia Pacific region has emerged as a high potential market for factoring services providers due to rapid industrialization and rising international trade activities in the region.

Market Drivers

The growing liquidity needs of small and medium enterprises has been a major market driver for the factoring services industry. SMEs rely heavily on timely collections from debtors to meet short term financial obligations. Factoring services help SMEs access cash advances on receivables instantly instead of waiting to receive full payments from customers after credit periods. This enhances working capital management and business cash flows of SMEs immensely.

PEST Analysis

Political: Factoring services market is regulated by central banking regulators in different countries. Any changes in banking regulations would impact the business operations and services offered by factoring companies.

Economic: Economic performance of key industries and overall country’s GDP growth influences the demand for factoring services from SMEs. During recessionary times, factoring businesses may see lower demand as companies access working capital from internal sources.

Social: Younger generations prefer digital modes of doing business. Factoring companies are leveraging digital technologies to offer online account management and invoice financing solutions to cater to changing social preferences.

Technological: Blockchain and AI are being leveraged by factoring businesses to automate transactions, improve risk assessment of clients and detect cases of invoice fraud. Digital platforms allow for a more seamless integration of factoring services with client ERP systems.

The geographical regions where the market is concentrated in terms of value are Western Europe and North America. Countries like the US, UK, Germany, France contribute significantly to the global factoring market size.

The fastest growing region for the factoring services market is expected to be Asia Pacific. With strong economic growth witnessed by major economies like China and India, the demand for working capital from Small and Medium Enterprises is surging rapidly. This is propelling the factoring market expansion across Asia Pacific over the forecast period.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it