Factoring / Receivables Finance is an alternative finance which is flexible and widely used amongst businesses. It is achieved by the business selling its accounts receivables to the financier for immediate cash usually to boost its working capital. Many SMEs are finding it more and more difficult to obtain funding from traditional sources such as the banks, especially in a slowing economy. This funding restriction is mainly due to banks being risk adverse as their bad debts rises. Moving to adopt Receivable financing is a secure and simple way to obtain funding.
FCI (Factors Chain International, a global network of leading factoring companies) has published its 2015 annual global review of receivable finance. The results were collated from 79 countries which represent around 94% of global GDP. The result is optimistic. Receivable finance market size went up 1.14% to €2,373 billion from 2014, with Europe (€1,471 billion, 62% of the world factoring volume) remaining the strongest in the region and the largest factoring market.
“The Factoring and Receivables Finance industry has entered a golden era as the service continues to grow unlike any other trade or working capital Finance offering.” – Peter Mulroy, FCI Secretary General
Asia is the second largest continent for factoring, forming 23.8% of the world factoring volume. In 2015, Asia’s factoring volume declined in 2015 by 8% to €563 billion. This was largely due to the slow economy caused by China and Taiwan, including lower commodity prices and a slowdown in cross border trade. However, 10 countries, including Singapore, have experienced growth in factoring in 2015, from €37.84 billion to €38.90 billion, a 3% increase. Hong Kong, from €30.8 billion to €33.43 billion, a 9% increase. Thailand, from €4.14 billion to €4.41 billion, a 9% increase.
We believe the future outlook on factoring in Asia is bright and will grow as more businesses are becoming aware of the product and its benefits.
At InvoiceInterchange, we offer a unique invoice trading platform which enables businesses to quickly convert their outstanding invoices into immediate cash.
Annual Review 2016, Facilitating Receivables Finance, FCI, October 2016
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