PUBLISHER: The Business Research Company | PRODUCT CODE: 1733583
PUBLISHER: The Business Research Company | PRODUCT CODE: 1733583
Invoice factoring is a financial service in which businesses sell their accounts receivable (unpaid invoices) to a third party, known as a factor, at a discount in exchange for immediate cash. This service helps businesses improve cash flow by converting outstanding invoices into working capital without waiting for customers to pay. Invoice factoring is widely used by companies across various industries that experience cash flow gaps due to delayed payments from customers. It is particularly beneficial for small and medium-sized enterprises (SMEs) and businesses that operate in industries with long payment cycles.
The invoice factoring market consists of revenues generated by entities (organizations, sole traders and partnerships) providing invoice factoring services to businesses seeking immediate liquidity. In a typical transaction, the factor purchases a company's invoices and advances a percentage of the invoice value upfront, with the remaining balance (minus fees) paid upon customer payment. This financial service is commonly used when businesses need to cover operating expenses, fund new projects, or manage seasonal fluctuations in cash flow.
The global invoice factoring market was valued at $2,194,500.56 million in 2019 which grew till 2024 at a compound annual growth rate (CAGR) of more than 7.00%.
Rising Small And Medium-Sized Enterprises (SMEs)
During the historic period, the rise in small and medium-sized enterprises (SMEs) contributed to the growth of the invoice factoring market. Small and medium-sized enterprises (SMEs) are businesses that maintain revenues, assets, or employees below a certain threshold, typically defined as having fewer than 250 employees in the EU and fewer than 500 employees in the U.S., with varying criteria by country and industry. Small and medium-sized enterprises (SMEs) are rising due government support programs, and increasing entrepreneurship driven by innovation and flexible business models. Invoice factoring is essential for small and medium-sized enterprises (SMEs) as it provides immediate cash flow by converting unpaid invoices into working capital, helping them manage operational expenses, payroll, and growth without waiting for long payment cycles. It is particularly beneficial for SMEs facing delayed customer payments or limited access to traditional bank loans. For instance, in December 2024, according to Statistics Canada, a Canada-based government agency, Canada had over 320,000 small businesses in rural and small-town (RST) areas in 2022, making up 14.6% of all small businesses, while nearly 1.9 million (85.4%) operated in urban areas. Similarly, 9,500 (13.2%) medium-sized businesses were in RST areas, compared to 63,215 (86.8%) in urban regions. Small business revenue grew 6.7%, rising from $866 billion in 2021 to $924 billion in 2022, with RST small businesses contributing $158.3 billion (17.1%). Medium-sized RST businesses generated $88.8 billion (12.7%) of the total $698.1 billion revenue in their category. Therefore, the rise in small and medium-sized enterprises (SMEs) drove the invoice factoring market in the historic period.
Integrated Invoice Financing Enhancing Cash Flow And Financial Flexibility For Businesses
Companies in the invoice factoring market are innovating by introducing integrated invoice financing solutions, enabling businesses to access working capital seamlessly. These solutions embed invoice financing directly into enterprise resource planning (ERP) systems, enhancing cash flow management and operational efficiency. By combining invoice management, verification and financing capabilities, integrated invoice financing allows businesses to streamline invoice processing, ensure accuracy and secure immediate cash advances on outstanding invoices, improving both liquidity and financial flexibility. For instance, in April 2024, Nuvei Technologies Corp., a Canada-based fintech company, launched Invoice Financing, an integrated solution within leading enterprise resource planning (ERP) platforms such as Sage and Acumatica. The solution enables businesses to expedite payments from invoiced customers with a single click, ensuring rapid access to funds within 24 hours. By leveraging existing payment transaction data, it offers uniquely favorable financing rates, enhancing financial flexibility and supporting business growth in a high-interest-rate environment.
The global invoice factoring market is highly fragmented, with a large number of small players operating in the market. The top ten competitors in the market made up to 0.31% of the total market in 2023.
Invoice Factoring Global Market Opportunities And Strategies To 2034 from The Business Research Company provides the strategists; marketers and senior management with the critical information they need to assess the global invoice factoring market as it emerges from the COVID-19 shut down.
Where is the largest and fastest-growing market for invoice factoring? How does the market relate to the overall economy; demography and other similar markets? What forces will shape the market going forward? The invoice factoring market global report from The Business Research Company answers all these questions and many more.
The report covers market characteristics; size and growth; segmentation; regional and country breakdowns; competitive landscape; market shares; trends and strategies for this market. It traces the market's history and forecasts market growth by geography. It places the market within the context of the wider invoice factoring market; and compares it with other markets.