Industry Analysis & Industry Trends
Factoring is a short-term financing option to increase a business' liquidity. Operators also purchase accounts receivable and unpaid invoices at a discount in return for immediate receipt of money. Industry revenue is expected to grow at a compound annual rate of 3.8% over the five years through 2016-17. Over the past five years, demand for factoring services has been propelled by difficulties in securing conventional loans. Improving economic conditions, rising business confidence and an expansion in UK business numbers also contributed positively to the industry's performance. However, difficulties associated with adequate funding, strict lending criteria and the low interest rate environment constrained growth.
In 2016-17, revenue is expected to rise by 2.5% to £2.7... purchase to read more
Industry Report - Industry Analysis Chapter
Factoring allows a business to obtain up to 85% of the value of its outstanding invoices. After rendering a service or delivering goods, a business issues invoices to its customers. It can then sell those unpaid invoices to a factoring firm at a discount in exchange for cash. By selling their invoices, businesses essentially transfer the ownership of their customers’ debts to the factoring business lending them the funds. At this point, the factoring enterprise assumes all the rights and risks that come with those invoices, including any payments that customers make or fail to make. In exchange, they receive a fee associated with the transaction and a percentage of the total invoice amount held until payment is made, for example the remaining 15%.
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