The global Factoring Service market is estimated to grow from USD 3.54 billion in 2020 in reaching USD 5.43 billion in 2026. The market is predicted to register a CAGR of 8% from 2021 to 2036.
Factoring services are likely to become an essential part of the supply chain networks due to the simplification of the services and their financial flexibility. Factoring is also known as debt factoring, asset-based lending, invoice finance is increasing popularly for businesses to increase cash flow by selling invoices o third parties at a discount.
Factoring is termed as the process of purchasing an organization's debt or invoice at a discount to asset the buyer at checkout. Factoring services can be offered by independent financial providers or banks. Maturity factoring, appeal, non-appeal, discourse, domestic, disclosure, export advancements are some of the common forms of the factoring processes.
The quick economic growth across the advancing countries and the demand for factoring as a substitute form are increasing which in turn fosters the market growth during the timeline period. Technological improvements like the adoption of blockchain and the provision of safe and stable financing services are to fuel the market growth.
Several companies and organizations like Factors Chain International (FCI) are creating awareness in consumers of businesses. Governments are supporting the growing adoption of the state-of-the-art receivables platform based on the new blockchain or Distributed Ledger Technology (DLT). The enterprise owners are increasing their interest to pursue new and non-conventional ways of finance for the companies.
However, a shortage of mindfulness, clumsy documentation processes hinder the factoring services market growth. Also, the conception of the high-interest rates hampers the market growth during the foreseen period.
As per the research report, the global factoring services market is based on the category, type, financial institution, and end-user.
By category, the domestic segment dominated the factoring service market. The segment accounted for nearly 70% of the market share in 2020. In China, the demand for domestic is high as the governments are efforting high to surge the private consumption propels the market growth.
The International segment has experienced generous growth due to the increase in open account trade. The growth of the segment is accredited to an increase in the open account trade from suppliers in emerging countries. The majority of the importers across the developing countries are considering factoring services as appropriate to conventional forms of trade accentuates the services demand. The increasing number of Chinese manufacturers are transferring their production facilities to the Philippines, Vietnam, and Mexico to prevent the continuous tariff war. The above-mentioned factors help in fueling the market further.
The recourse type segment led the factoring service with more than 55% of the share in 2020. The segment offers all facilities excluding debt protection. The recoursing factoring is widely used in developed countries.
Based on the financial institution, the bank segment dominated the factoring service in 2020 with nearly 80% of the share. Globally, banks are the major source of financial organizations. These banks are progressively providing factoring services due to the technology adoption like distributed ledgers.
Moreover, certain banks are advancing blockchain technology platforms in addressing the client's financial needs.
The manufacturing end-user constituted the largest share with more than 30% in terms of revenue. The manufacturing sector is extended across countries like India, and other South and Southeast Asian countries propel the end-user segment growth. The demand for factor financing is promised to surge.
The other segments like healthcare, transportation, and logistics are experiencing appreciable growth over the foretold period. Medical factoring is supporting the companies to overcome the cash flow problems caused due to delayed payments. Most of the services are majorly used by healthcare providers and medical professionals.
The European market for factoring services is said to generate around 60% of revenue share during the forecasted period. France, Italy, the UK, and Germany constitute more than two-thirds of the region's market. The growth owes to the tactical importance of receivables funded by the commercial banking sector. The existing trade within the European Economic Zone and rising trade with quicking markets in Eastern Bloc countries are accumulating the demand for factoring services in Europe.
In North America, United States plays a vital role in the growth of the factoring services market.
However, Asia-Pacific is expected to be the most adaptable region throughout the timeframe period. The Asian countries are appearing as major hubs for those companies concentrating on low-cost manufacturing. China and India have a larger need for factoring services in small and medium (SMEs) in the APAC. China is the main exporter of chemical materials, electronic components, and other industrial products is accumulating the factoring services market growth.
Latin America and the Middle East and African regions are said to have notable growth in the factoring services market.
Major vendors in the Factoring Service Market
Some of the prominent players operating in the Factoring Service market:
During the pandemic period, the demand for healthcare facilities and medical professionals is on the high rise and accentuates the growing demand for factoring services in the healthcare sector. Moreover, the sudden eruption of the COVID-19 pandemic has affected the global economy resulting in supply chain disruptions and influencing a strict financial impact on financial markets and enterprises.
The COVID-19 lockdowns, emergency declarations in countries, travel-related bans, and panic in people have also affected certain industries. In the upcoming years, the developments are said to suppress the factoring services market growth. The quick and widespread COVID-19 pandemic relatively smashes completely economy of the financial markets and enterprises.
Factoring Service Market - Forecast (2021 - 2026)
Chapter 1. Factoring Service Market – Scope & Methodology
1.1. Market Segmentation
1.3. Research Methodology
1.4. Primary Sources
1.5. Secondary Sources
Chapter 2. Factoring Service Market – Executive Summary
2.1. Market Size & Forecast – (2021 – 2026) ($M/$Bn)
2.2. Key Trends & Insights
2.3. COVID-19 Impact Analysis
2.3.1. Impact during 2021 - 2026
2.3.2. Impact on Supply – Demand
2.3.3. Impact on Production Cost
2.3.4. Impact on Supply Chain
Chapter 3. Factoring Service Market – Competition Scenario
3.1. Market Share Analysis
3.2. Product Benchmarking
3.3. Competitive Strategy & Development Scenario
3.4. Competitive Pricing Analysis
3.5. Supplier - Distributor Analysis
Chapter 4. Factoring Service Market Entry Scenario
4.1. Case Studies – Start-up/Thriving Companies
4.2. Regulatory Scenario - By Region
4.3 Customer Analysis
4.4. Porters Five Force Model
4.4.1. Bargaining Power of Suppliers
4.4.2. Bargaining Powers of Customers
4.4.3. Threat of New Entrants
4.4.4. Rivalry among Existing Players
4.4.5. Threat of Substitutes
Chapter 5. Factoring Service Market - Landscape
5.1. Value Chain Analysis – Key Stakeholders Impact Analysis
5.2. Market Drivers
5.3. Market Restraints/Challenges
5.4. Market Opportunities
Chapter 6. Factoring Service Market – By Category
Chapter 7 . Factoring Service Market – By Type
Chapter 8 . Factoring Service Market – By Financial Institution
8.2. Non-Banking Financial Institutions
Chapter 9 . Factoring Service Market – By End-User
9.2. Transport & Logistics
9.3. Information Technology
Chapter 9. Factoring Service Market , By Geography – Market Size, Forecast, Trends & Insights
9.1. North America
9.2.7. Rest of Europe
9.3. Asia Pacific
9.3.2. South Korea
9.3.5. Australia & New Zealand
9.3.6. Rest of Asia-Pacific
9.4. Rest of the World
9.4.1. Middle East
9.4.3. South America
Chapter 10. Factoring Service Market – Company Profiles – (Overview, Product Portfolio, Financials, Developments)
10.1. Company 1
10.2. Company 2
10.3. Company 3
10.4. Company 4
10.5. Company 5
10.6. Company 6
10.7. Company 7
10.8. Company 8
10.9. Company 9
10.10. Company 10
Primary & Secondary Sources to Collect & Validate Data
Utilization of Both Top Down & Bottom Up Approach
Holistic Research Methodology
Scope & Introductory Research
In the initial stage of research, the scope for market is defined. In order to better understanding of the market, secondary focus is on different segmentations of the market. Preliminary research involves identifying key data points related to the market under consideration to estimate the market sizes to the best extent.
Based on the scope of the market and the key data points, a number of secondary sources are considered. This data collection stage consists of a team of analysts who gather data from various secondary resources, accessing proprietary databases and primary research by reaching out to key market participants and opinion leaders.
At this stage, collected data using several sources is arranged in structured format. The sources include industry participants, in-house models, key opinion leaders in the market ecosystem and databases. Historical data trends are established at this point, and compared to the current scenario. Based on the macro- and micro-factor prevailing in various geographies, proprietary data models are used to analyze key market countries. Key players in this market are listed based on their capabilities in revenue, sales, and development. The study also involves the identification of companies in the category of 'new entrants' and their potential effects on the market.
At this stage, the analyst team moves on to understand how the market has changed over the years. The total size of the market is gathered after an study of different business segments and end-users is done. An impact research is also done to see what factors will/may influence the market in the years ahead. The effect of various variables on the industry is often taken into account when forecasting market sizes.
Data verification is conducted at all research levels, however this stage is dedicated to more rigorous checking of the data points. At this stage, the estimated data is triangulated with company revenues and checked with industry experts including several senior executives and key opinion leaders in the market. The data is then summarized, and the findings are derived from the same for the report.
Quality Assurance & Report Preparation
Holistic research methodology is followed with combination of Top Down and Bottom Up approach to undertake the estimation and forecasting task in order to ensure quality of data. At this stage of the research process, a dedicated QA team checks the data and approves after several predefined checks. Each section is checked and questioned to make the report accurate and reliable. In case of discrepancy, a team of analysts reviews the issue, and the whole process is repeated again. That significantly improves the report's quality. After approval, all the parts of the report are brought together and is formatted by highly trained team thus making it ready to dispatch.