Factoring in the UK - Market Research Report (2014-2029)

Declining returns: Revenue is set to dip in 2022-23 as business pessimism discourages borrowing

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.

The high uptake in funds received by SMEs heavily supported factoring companies leading up to the pandemic. However, after COVID-19 struck, the government's heavy backing of conventional lending hit demand for factoring companies; that's not to say the government doesn't support factoring, since the British Business Banks provide guarantees to cover a portion of credit losses for designated lending portfolios. Over the five years through 2022-23, factoring companies' revenue is forecast to increase at a compound annual rate of just 0.2% to £3.3 billion.

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. Factoring companies generate revenue through factor fees, or the difference between the price paid for the invoice and money received from debtors.