Factoring in the world

PREDOMINANCE OF EUROPAN FACTORING

Factoring services are particularly popular in Europe. Up to 65% of the receivables in the world are assigned to factoring companies come from sellers who do the business in the Old Continent. A further 25% receivables serviced under factoring terms are the ones from the Asia-Pacific region. In total it makes as much as 90 percent of the World market.
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Asia-Pacific
23.38%

Factoring market
share by continents
in 2016

Liders in Europe
faktoring market
in 2016

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South America
4.39%

Africa
0.86%

Middle East
0.32%

Europe
67.05%

North America
4.00%

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Italy

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Spain

United Kingdom

Germany

France

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This great and ever growing popularity of factoring in Europe is due to the special nature of the continent’s trading. The Old Continent’s internal market benefits the development of the exchange of goods and services within the European Economic Zone, in which operate both the “old” European Economic Community and the “new” countries, especially the former Eastern Bloc countries. The latter are fast-growing markets, so the trades with them and between them are growing rapidly.

The first European factoring transactions are dated early ‘60s of XX century. European markets, where most of the businesses are most likely to benefit from factoring today are: Great Britain (377 billion euros), France (248 billion euros), Germany (209 billion euros), Italy (190 billion euros) and Spain (115 billion euros).

In the countries of Western Europe one can notice the saturation of classic factoring services. This is a characteristic feature of all financial services. However, it is a starting point for innovators. In order to meet the growing customers’ demands, the avant-gardists are looking for new, interesting solutions in factoring.

FROM THE HISTORY OF FACTORING

The origins of factoring should be sought even in ancient times. Some descriptions re “debt management” and “trade financing” on such the basis was known in Mesopotamia nearly 5,000 years ago. The specialized agents are noted down in cuneiforms writings. The factoring like service have been appearing in colonial times again. Its contemporary shape was worked out in the United States in the second half of the 19th century. Here the factor comes into a new role – from the agent, it became a creditor for manufacturers and suppliers of commercial goods.

After the World War II that was necessary to apply this form of financing in the supply of goods exported to Europe from the US. At that time, the model of cooperation with entrepreneurs was transferred here. The new service was the fastest in the UK.

Thanks to its advantages, factoring has become a vital financial instrument of the modern economy. Its popularity is constantly growing. Factoring is a proven financial tool especially in hard times for entrepreneurs, in times of recession or economic slowdown.

Global factoring [%]

    GLOBAL FACTORING VOLUMES BY REGION

    L.p.Region2015 [mln euro]2016 [mln euro]Share
    1 Africa 18,721 20,393 0,86 %
    2 Asia-Pacific 596,633 555,550 23,38 %
    3 Europe 1,557,052 1,592,974 67,05 %
    4 Middle East 8,028 7,583 0,32 %
    5 North America 100,530 95,072 4 %
    6 South America 86,826 104,396 4,39 %
    7 Total 2,367,790 2,375,967


    ACCUMULATIVE FCI FACTORING TURNOVER [MLN EURO]



    INNOVATIVE MARKET

    An interesting offer was proposed in the UK, where the first online platform for receivables was created. It allows small businesses to sell the receivables to the investment funds or private investors. This solution eliminates payment bottlenecks and allows investors to gain the profit from the investments. This innovative platform has hooked up with great interest by both entrepreneurs and investors.

    The ongoing development of information technology shall create the space for introducing more and more advanced solutions that will simplify the use of the service on the one hand, and to adapt it flexibly to the changing demands in the digital world.