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.
share by continents
Liders in Europe
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.
ACCUMULATIVE FCI FACTORING TURNOVER [MLN EURO]
L.p. Category 2009 2010 2011 2012 2013 2014 2015 2016 Variation 2015/2016 1
Domestic Factoring FCI
Export Invoice Discounting
International Factoring FCI
Grand Total FCI
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.