Risk factors: Uncertainty has deterred investment and limited demand for services

Factoring is a short-term financing option to increase businesses' liquidity. Operators also purchase accounts receivable and unpaid invoices at a discount in return for immediate receipt of money. Over the five years through 2018-19, industry revenue is anticipated to increase at a compound annual rate of 3.4%. Over the past five years, demand for factoring services has been propelled by difficulties in securing conventional loans, rising business confidence, and growth in the number of UK businesses. An increasing level of industry assistance and rising demand for UK-made goods has also contributed to the industry's expansion.Despite the overall positive outlook, operators are expected to have endured difficult conditions towards the end of the current period...read more.

Industry Statistics & Market Size
Revenue
£3bn
Annual Growth 14-19
3.4%
Forecast Growth 19-24
Profit
Employment
5,756
Businesses
81

Industry Threats & Opportunities

  • Competition from conventional credit sources and alternative financing options has grown
  • The industry faces increasing competition from other alternative sources of financing
  • Manufacturing and construction markets are anticipated to become increasingly important
  • Industry Report - Industry Investment Chapter

    The level of capital intensity is determined by comparing the human and capital equipment factors of production, using wages and depreciation costs as proxies. Comparatively high depreciation costs indicate substantial investment in depreciable assets, resulting in high capital intensity. Conversely, comparatively high wage costs indicate high labour intensity.The Factoring industry has a low level of capital intensity, with an estimated capital-to-labour ratio of 1:8.32 in 2018-19. This indicates that for every £1.00 spent on capital, £8.32 is spent on labour. Factoring businesses involved in the provision of short-term commercial finance invest a proportion of their revenue in financing technology infrastructure, property and equipment to enable them to deliver their services. How...purchase to read more.

    Additional Insights for the Factoring Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Factoring Industry are

  • Having a diverse range of clients
  • Financial position of the company (as against financial structure)
  • Superior financial management and debt management
  • IBISWorld analysts also discuss how external factors such as Business confidence index and Number of businesses in the Factoring industry impact industry performance..

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    What's in this report

    What is the Factoring Industry?

    Firms in this industry specialise in short-term debt financing and invoice discounting. Factoring involves a company selling its accounts receivables or invoices to a third party as a means of accessing cash to finance further business activity without having to wait for their debtors to pay them. Operators generate revenue through factor fees, or the difference between the price paid for the invoice and money received from debtors.

    Industry Products
  • Domestic factoring
  • Domestic invoice discounting
  • Asset-based loans
  • Other factoring and related services
  • Industry Activities
  • Factoring
  • Invoice discounting
  • Debt financing
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Business confidence index
  • Number of businesses
  • Official bank rate
  • Industrial production index
  • Business profit

  • Current Performance
  • Regulation and industry assistance
  • Increasing client base
  • Innovative solutions
  • Competition
  • Withholding investment
  • Rising rates and impairment
  • Competition

    and profit

  • Chart: Revenue Growth

  • Industry Outlook
  • Industry growth
  • Downstream demand
  • Revenue restrictions
  • Future challenges
  • Table: Factoring Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Factoring Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Motor Vehicle Manufacturing
  • Pipeline Transport
  • Banks

  • Key Selling Industries
  • Accounting & Auditing
  • Financial and Insurance Activities
  • Tax Consultants

  • Products & Services
  • Domestic invoice discounting
  • Asset-based loans
  • Other factoring and related services
  • Domestic factoring
  • Chart: Factoring Industry Products and Services Segmentation

  • Demand Determinants
  • Business activity and credit supply
  • Business confidence
  • Credit accessibility

  • Major Markets
  • Services sector
  • Manufacturing sector
  • Wholesale and distribution sector
  • Other
  • Transport sector
  • Construction sector
  • Retail sector
  • Chart: Major Market Segmentation for the Factoring Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitInterestPurchasesLoan losses, provisions and impairment chargesWagesOther costs
  • Chart: Cost Structure Benchmarking – Sector vs Factoring

  • Basis of Competition
    Internal competitionExternal competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Factoring Industry

  • Industry Globalization
    The Royal Bank of Scotland Group plc, HSBC Invoice Finance (UK) Ltd,
  • Table: The Royal Bank of Scotland Group plc - financial performance
  • Table: HSBC Invoice Finance (UK) Ltd - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Factoring Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Factoring Industry
    Includes:
  • Industry Revenue (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Wages (2010-2024)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Asset-Based Lending
  • Short-term lending where a company's assets such as invoices, stock, plant, machinery or property are used as collateral to access funds for a short period of time to improve cash flow.
  • Crowdfunding
  • The practice of funding a project or venture by raising monetary contributions from a large number of people.
  • Invoice Discounting
  • A form of short-term funding where a business uses its invoices as collateral to gain funding from a finance company for liquidity and cash flow purposes.
  • Libor (London Interbank Offered Rate)
  • The rate or cost of borrowing between financial institutions.
  • Net Interest Margin
  • A measure of the difference between interest income generated and the amount of interest paid to lenders.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Factoring market research report is a comprehensive guide to market size and growth prospects. Our industry reports offer strategic industry analysis of the factors influencing companies, including new product developments, economic, lifestyle and demographic influences, distribution and supply chain factors and pricing issues. Full analysis accompanies our data forecasts to illustrate how the market responds to emerging industry trends.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Factoring:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Factoring market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Factoring, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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