Global factoring volumes have reached a record €2.37tn in 2015, but the modest growth of 1.4% from the previous year points to growth imbalances across different regions.

While domestic factoring remains dominant over international factoring, counting for 78% of the total, cross-border factoring increased by 8%, and is expected to keep driving factoring growth in the future.

Yet, the annual survey by Factors Chain International (FCI), a network that includes over 290 factoring companies worldwide, reveals that the only region experiencing overall growth is Europe, which is factoring’s largest market. There, volumes have increased 6%, driven by growth in the continent’s largest economies of the UK, France, Italy and Germany, and fast-rising demand in emerging economies in Serbia, Hungary and Romania.

The thorn in factoring’s side is the slowdown in Asia where, similarly to last year, factoring volumes have dropped, affecting the overall factoring growth rate that remains below the seven-year compound annual growth rate (CAGR) of 9%. While Japan and Hong Kong both experienced increased volumes of 6% and 9% respectively, Asia registered an overall 8% drop in factoring volumes.

“Companies in the region are more reluctant to purchase in larger quantities due to the decline in retail sales in the greater China region and the uncertainty that brings to the market. The decline in commodity prices has also impacted volume, resulting in reduced valuation of invoices,” says Peter Mulroy, FCI secretary general. “However, some expect the slack to be taken up by new players and new entrants in the markets, from the numerous independent commercial factors that have evolved in China, fintechs, and the smaller city and regional banks, which are growing in influence.”

Factoring growth also declined in the Americas and Africa, recording a 6% and a 13% fall. In the Americas, Brazil, Chile and Mexico saw declines of 9%, 10% and 24% respectively, but on the other hand Uruguay, Argentina, Costa Rica and Colombia grew by an average of 20%.

In Africa, the most visible decline was recorded in South Africa, where volumes fell by 10%, while Egypt was the best performer, as the market grew by 23%.

Amidst these challenges, the outlook for 2016 is not overtly positive. “We expect 2016 to be another year of mixed fortunes,” says Mulroy.

global factoring market