The factoring market
On a worldwide scale, almost a thousand companies currently offer factoring services, of which 435 are in Europe (Sources: Factor Chain International).
The factors, namely the companies operating in this market, are usually subsidiaries of banking groups, financial institutions, insurance companies or manufacturing firms, and rarely independent companies.
The current internationalisation of the market is reflected in a growing trend towards buyouts and mergers in a sector still dominated by essentially national agents.
The diverse nature and current demands of businesses that use factoring are currently contributing to the emergence of new services and ever-increasing incorporation of new technologies.
Figures for 2006
Factoring in Europe, Factoring in the world, International Factoring, The history of factoring
Factoring in Europe
The European market continued its double-digit growth at a rate of +12.8% in 2006 (+11.6% for the world as a whole) and now represents 71% of global volume.
- The UK (€254 billion) is by far the largest market and is continuing its strong growth (+16.5% in £), in spite of a high penetration rate (13.4% of GDP).
- After three years of recession, Italy (€120 billion) has returned to growth: +8.3%.
- France (€100 billion) will soon move into second position, with respectable growth of 13.7%.
- Germany (€72 billion) is continuing its strong growth (+30%, x 2 in three years), and still has substantial potential on the basis of its low penetration rate (3.1%)
Eurofactor ranks fifth in Europe, with 4.3% of total European volume.
- Growth of the European market 1998-2006 (€ billion)
Source : FCI
Factoring in the world
The performance of the global factoring market decreased slightly compared to 2005, with a growth rate of +11.6% in 2006.
- Volume and changes in the factoring market 1998-2006 (€ billion)
Source : FCI
International Factoring
International Factoring represents 9.1% of global factoring.
- Volume and relative weight of international factoring 1998-2006 (€ billion)
Source : FCI
The history of factoring
The 60's witnessed the birth of factoring in the domestic market
Factoring started in the United States, and then, as a result of pressure from joint ventures between American factoring companies and local partners, it rapidly became established in western European countries in the middle 60's.
The 70's witnessed a rapid growth in factoring
For a good many companies, economic crisis and mass bankruptcy are synonymous with a need for greater security. In such crises, factoring companies then bring the necessary guarantee of secure customer account management.
At the same time, the growth of international trade was no longer restricted solely to multinationals, but also involved many more modestly-sized businesses which found in export factoring a simpler and risk-free solution for their business development needs.
The 80's was the decade when factoring matured and developed
The factoring market experienced a boom associated with a new functional approach on the part of the main factors - growth and vigour in commercial processes, the emergence of new international networks, flexibility and customisation and new customer services.
Today, growth and mutual trust
Although the late 80's were characterised by a slight stagnation in the factoring business worldwide, the market is now experiencing renewed vigour. There are several reasons for this:
- Companies have a better understanding of the services and benefits factoring can provide
- Constant innovation, the guarantor of varied services which are regularly updated to suit company needs
- The boom in the outsourcing of accounts receivable management
A growth in factoring at international level
2005: upturn
In 2004, the French factoring market returned to strong growth, at a rate of 11.3%. This buoyant market still offers high growth potential.
In a highly competitive market, the main priority among factors remains the development of new services.
In 2005, factoring continued to advance: +10.7%, with total receivables handled amounting to €89 billion.