Factoring is a type of financial service which is used to convert credit bill into cash. With factoring mechanism or process, an organization can generate finance against their receivables. The process allows you to make cash payments to suppliers, which helps to reduce production cost. Increasing awareness, growing technological developments, high demand for financing, growing trade activities among countries, efficiencies in process, and increasing SMEs are some significant factors will drive the demand for factoring is anticipated to grow over the prediction period. However, the international factoring market is fragmented with the existence of a huge number of established domestic and global providers.
The growth in factoring across the world has been majorly fueled by the increase in open account trade, particularly from suppliers in the emerging countries. On the other hand, the leading importers in the emerged regions are pushing the demand, comprising the adoption of factoring. In addition to this, China has played a significant role in the global factoring market since the last decade, with a high rate of more than 50% per year, the region becoming one of the highest factoring markets across the globe.
The technological advancements such as blockchain in factoring services are the most significant trend which is anticipated to increase traction during the prediction period. Growing investment in blockchain by the government of the number of countries is one of the crucial factors projected to boost the incorporation of blockchain in several sectors such as BFSI and others. In addition to this, continuously growing innovation in the blockchain technology is helping the service providers to involve in factoring mechanism to decrease their risks. However, the advancements in blockchain will drive the global factoring market over the forecast period.
According to the regional landscape, the factoring industry is occupying near around 65.5% of share in the year 2017 strongly followed by the ASPAC. In addition, North American market also contributed a smaller factoring market share in the year 2017. Thus, the adoption of factoring mechanism is high across the number of SMEs and larger corporations. Furthermore, with more than 63.44% share, the MEA region dominated for one of the largest markets for factoring, and it will be expected to remain its dominance with healthy growth rate into the coming years. Likewise, the EU government is trying to increase finance accessibility across the region.
In addition to this, several factors such as price, fees, eligibility, and the process can differentiate and evaluate across factoring enterprises. Moreover, domestic factoring had dominated for the largest factoring market share in the year 2017 and it will remain to dominate over the prediction period, due to its increasing popularity in both developing as well as developed countries. In addition, the global factoring market is anticipated to increase with the largest growth rate due to its rapidly growing huge number of applications and increasing awareness among import and export businesses. Hence, the international factoring market is accounted to react at a significant growth rate of more than 15.8% into the coming few years.
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