The factoring services market is estimated to be valued at USD 4,389.48 Bn in 2024 and is expected to reach USD 7,347.43 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 7.6% from 2024 to 2031.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and short-term financial needs. Through factoring, a business can obtain liquid funds without having to wait for the lengthy payment period for their customers or clients. This financial transaction allows businesses to improve their cash flow, reduce credit and risk exposure, and focus on their core operations. Factoring services provide an alternative source of working capital to many small and medium-sized enterprises.
Market Dynamics:
The global factoring services market growth is primarily driven by the working capital requirements of small and medium-sized businesses. As obtaining financing from banks can be a difficult and lengthy process for SMEs, factoring services provide them quick access to cash from their receivables. This addresses the cash flow issues faced by SMEs. Moreover, factoring allows businesses to transfer credit and debt collection risks to the factoring company. This spurs the demand for factoring especially among businesses dealing with a large number of customers with varying creditworthiness. However, factors may charge high-interest rates, commissions and penalties which can reduces the margins of businesses. Furthermore, businesses lose the chance of getting discounts if receivables are paid before the due date. Nonetheless, the growing SME sector worldwide is widening opportunities for growth of factoring services market.
Key features of the study:
Detailed Segmentation
Table of Contents
*Browse 60 market data tables and 40 figures on "Global Factoring Services Market - forecast to 2031”.
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