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Factoring and Invoice Discounting Market Report 2003
Key Note Publications Ltd, July 2003
This report examines the factoring and invoice discounting market in the UK. The market is extremely healthy the numbers of both clients and providers of finance are increasing and the levels of borrowing are rising. In spring 2003, the industry was in a bullish mood with high hopes for the rest of the year and optimistic expectations for 2004 and beyond.
We estimate that the market for factoring and invoice discounting in the UK and Republic of Ireland was worth £116.04bn in 2002. In value terms, invoice discounting takes a major share of the market and is showing the fastest growth, but the number of factoring clients remains high.
This market is showing strong growth. We estimate that the total value of the market increased by 17.6% in 2002, which is in line with the increase in clients' sales reported by members of the Factors and Discounters Association (FDA). The market is currently described as a buyer's market, with factoring and discounting companies eager to pick up business in what has become an overcrowded industry.
Factoring clients are usually smaller than invoice discounting clients, thus their borrowing needs tend to be lower. Conversely, invoice discounting clients tend to be larger in size and negotiate much larger financial packages. These packages increasingly include asset-based finance, where the lending is based on physical assets and not on debtor value.
The major companies include: The Royal Bank of Scotland Commercial Services Ltd, Lloyds TSB Commercial Finance Ltd, Barclays Bank PLC Sales Financing, Hsbc Invoice Finance (UK) Ltd and Gmac Commercial Finance PLC.
Europe accounts for two-thirds of the global market for factoring and discounting and the European market is led by the UK and Italy. Along with the US, these are the top three factoring and discounting markets in the world.
We forecast continued strong growth for the industry between 2003 and 2007, which will continue to be led by the invoice discounting sector. Some of this growth will be fuelled by a rise in the number of larger clients. As the market becomes more competitive, companies are expected to make increasing use of branding as a means of differentiating their services from those of their competitors.
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