Factoring: Key market research findings
- Factoring industry’s awareness of supply chain finance
- Financing corporations and MSME suppliers using electronic platform
Technavio has released a new market research report on the global factoring market, which is expected to grow at a CAGR of 11% between 2016 and 2020. Factoring has become an important source of financing especially for the short-term working capital required by MSMEs and large corporates. The biggest advantage of using a factor is that it offers the exporter 100% protection against the importers’ inability to pay. EMEA is the largest revenue-contributing region in the factoring market, accounting for 64% of the overall market share. Growth in structured financing in EU is one of the key drivers of this region’s growth.
Advantages of factoring
Source: Technavio, 2016
“Supply chain finance is one of the latest trends gaining traction in the global factoring market. Supply chain financing optimizes the working capital, and improves the lenders’ ability to finance the production units of individual companies with special focus on the supply value chain activities. Through the use of supply chain finance, the factoring market will be able to help lenders finance the manufacturer even if they do not have a good borrowing term,” says Bharath Kanniappan, Lead Analyst, Industrial Automation, Technavio Research.
Several major vendors are participating in factoring programs that operate on electronic platform. This helps the banks link the large buyer firms with small risky firms. Vendors are availing electronic channels and a supportive legal and regulatory environment that helps them cut costs and provide greater SME services in the emerging markets. Also, the efficiency of the electronic platform allows the small suppliers to receive money within just one business day.
The key player in the global factoring market are 1st PMF Bancorp, Aldemore Invoice Finance, American Receivable, Bibby Financial Services, Capital Plus, Charter Capital, RBS Invoice Finance, Riviera Finance and Universal Funding. This is a fast-growing market, which is spreading rapidly in the developing regions of the world. The factoring business houses compete with major banks, trust companies, private mortgage holders, credit unions, and crown corporations like the business development corporations.
A more detailed analysis is available in the Technavio report, Global Factoring Market 2016-2020.
We can customize reports by other regions and specific segments upon request.
Other related reports:
