South America Factoring Services Market Outlook, 2030

Factoring services in South America have grown steadily in relevance due to limited access to traditional credit by small and medium-sized enterprises (SMEs) across the region. Countries such as Brazil, Chile, Argentina, Colombia, and Peru maintain formal structures for factoring operations through banks, non-banking financial institutions (NBFIs), and fintech firms. In Brazil, the Central Bank recognizes factoring under commercial and financial service categories. Chile’s DICOM registry and publicly accessible invoice databases streamline invoice discounting, and local banks support factoring in regional hubs like Santiago, Valparaíso, and Concepción.

Argentina's factoring activity primarily moves through private companies due to limited centralized regulation. In Colombia, the presence of the national electronic invoicing system (DIAN) helped digitize receivables financing. Peru also integrated electronic invoices into its financial system through SUNAT, making the country’s factoring services more transparent. Over the last five years, alternative lenders and digital platforms entered the region to meet the increasing demand from exporters and SMEs. In Brazil, fintechs such as Nexoos, BizCapital, and QI Tech have expanded invoice financing and cash flow products. In Chile, Cumplo, a digital factoring platform, offers invoice-backed credit to SMEs and individual investors. Public development banks such as BNDES in Brazil and BancoEstado in Chile also indirectly support factoring for micro and small businesses. Exporters in the agriculture, textile, and food sectors use international factoring through channels connected to FCI (Factors Chain International). These services are important in port regions such as Santos, Cartagena, Callao, and Buenos Aires. The region also sees increased use of factoring by logistics, food processing, and packaging companies, especially in Brazil and Colombia. Governments and central banks across the region recognize factoring in domestic financial reports, though reforms vary by country. The need for short-term liquidity and delayed payments from buyers continues to push SME demand for invoice-based financing mechanisms.

According to the research report, "South America Factoring Service Market Overview, 2030,", the South America Factoring Service market is anticipated to add to more than USD 60.29 Billion by 2025-30. In Brazil, Resolution No. 4,991 issued by the Central Bank in March 2022 allowed fintech companies to expand credit services, including receivables financing. This opened avenues for digital factoring platforms to operate with official approval. In Colombia, Decree 1154 of 2020 regulated the electronic trading of invoices, and by 2023, DIAN's RADIAN system became central to monitoring factoring transactions digitally. Chile’s Law No.

19,983, which mandates the transferability of invoices, enabled both banks and fintechs to offer structured factoring products with legal backing. The Peruvian government mandated electronic invoices through SUNAT since 2022, which helped SMEs adopt factoring for better cash flow. Argentina operates without a federal factoring law, though private platforms and fintech lenders like Afluenta and InvoiNet support invoice discounting across local industries. For instance, in August 2023, India Exim Bank announced the support for small- and medium-sized businesses (SMEs) in the country. The bank's new branch in GIFT City, under the International Financial Services Centre (IFSC), will provide international factoring services to MSMEs. This initiative aims to improve MSMEs' access to working capital, potentially boosting their participation in global trade. In South America, export-oriented SMEs in seafood, timber, cocoa, and textile sectors increasingly use cross-border factoring facilities supported by global trade finance institutions. The Inter-American Development Bank (IDB) and Latin American Association of Development Financing Institutions (ALIDE) periodically introduce programs to enhance SME access to receivables finance. Brazil’s PIX payment system, introduced in 2020, has improved transaction traceability, encouraging digital factoring growth. Government e-procurement platforms in Chile and Colombia also integrate factoring services for public-sector suppliers.

Market Drivers

• Public Sector Push for Formal Financing: Several Latin American governments are promoting invoice discounting platforms to formalize SME lending. In Brazil, the government has backed platforms like “Nota Fiscal Eletrônica” that facilitate invoice registration and transparency, making it easier for factoring companies to verify and purchase receivables. This boosts factoring activity by reducing fraud and encouraging small enterprises to monetize invoices.
• Rising Demand from Agribusiness Exporters: South America's commodity exporters are leaning on factoring to smoothen cash flows amid global trade volatility. In countries like Argentina and Brazil, agribusinesses use factoring to mitigate delayed overseas payments and improve liquidity during crop cycles. This is helping factoring firms gain clients from the soy, beef, and grain export chains.

Market Challenges

• Legal Uncertainty and Contract Enforcement: Several South American countries lack unified laws around invoice factoring. Enforcement of payment contracts remains weak, and court delays hinder recovery of bad debts. This creates risk for factoring firms, especially in cross-border transactions, where contract validity and debtor solvency are difficult to ensure.
• High Inflation and Currency Volatility: Factoring firms face pricing difficulties due to persistent inflation and currency depreciation in countries like Argentina and Venezuela. Converting invoice values from volatile local currencies to stable currencies for funding increases financial risk. This discourages foreign investors from entering the local factoring market.

Market Trends

• Digital Factoring Platforms Expanding Access: Digital lenders like Omni and FinanZero in Brazil are offering invoice-based lending via apps and online dashboards, helping freelancers and micro-entrepreneurs in cities like São Paulo and Medellín access working capital. These platforms are disrupting traditional factoring by reducing processing time and collateral needs.
• Rise of ESG-Linked Factoring Products: Factoring providers are developing ESG-linked receivables finance products targeted at sustainable businesses. In 2024, Creditas in Brazil launched a program offering better factoring rates to companies with certified environmental or social impact projects. This supports green supply chains while opening new factoring customer segments.

Domestic factoring dominates because most small and medium businesses in South America operate within national borders due to export-related credit risks and regulatory complexities.

Local enterprises in South America, especially in Brazil, Argentina, Colombia, and Chile, depend heavily on domestic sales to maintain cash flow. These firms face slow-paying clients, inflation-linked cost structures, and tight credit conditions from traditional banks. Domestic factoring provides an immediate liquidity solution without cross-border complications. Export factoring in the region remains less preferred due to foreign exchange controls, weak trade finance infrastructure, and exposure to international payment defaults. Domestic factoring, on the other hand, enables businesses to quickly convert accounts receivable into working capital without needing collateral or disrupting customer relationships.

It is simpler to manage since it involves local legal frameworks, currencies, and business practices. Local regulations often support domestic factoring with tax exemptions or reduced procedural obligations, making it even more attractive for firms with thin margins. Additionally, the complexity of complying with international anti-money laundering norms and KYC regulations discourages smaller South American firms from export factoring. Large domestic retailers, distributors, and even government entities in Brazil and Colombia delay payments up to 120 days, putting significant strain on suppliers. Domestic factoring fills this gap by giving upfront cash, improving working capital, and helping businesses avoid borrowing at high-interest rates. In many countries like Brazil, factoring is not classified as a financial service but rather a commercial activity, which eases entry for non-banking firms and simplifies domestic operations. This structure further pushes businesses to prefer factoring in local markets where risk, legal enforcement, and relationships are more manageable. With rising inflation and continued delays in invoice settlement, businesses across logistics, retail, and manufacturing keep using domestic factoring as a primary funding tool.

Recourse factoring is growing the fastest because it offers lower fees, aligns with credit risk patterns in the region, and gives providers more control in recovering payments.

In South America, recourse factoring is becoming increasingly popular among businesses because of its affordability and flexibility. Under recourse factoring, the company selling the invoice remains responsible if the customer fails to pay. This model significantly lowers the risk for the factor and reduces the cost of services for the client. Businesses in Brazil, Argentina, and Chile prefer recourse because they are often dealing with known, repeat customers and can assess their creditworthiness independently. Since many businesses work with a consistent set of buyers, they feel comfortable retaining the default risk.

The cost difference between recourse and non-recourse factoring can be significant sometimes up to 2% lower, which matters for cash-strapped SMEs in regions where financing options are limited. Also, factors offering recourse services can onboard more clients quickly because they don’t have to run detailed credit checks on each debtor, speeding up transactions. This suits dynamic sectors like wholesale, agriculture, and small manufacturing in South America where invoice cycles move fast. Even during economic instability, businesses continue opting for recourse factoring to save on fees and maintain immediate cash access. The model also fits well in markets like Brazil, where the legal framework allows for the easy assignment of receivables and encourages private parties to negotiate flexible repayment clauses. Many factors, especially non-bank financial entities and fintechs, offer digital platforms that automate the recourse process, allowing faster settlements and real-time monitoring. With access to invoice data and strong digital verification tools, these providers reduce the risk of defaults while still passing responsibility to the client. This makes recourse factoring both practical and scalable for regional firms.

Non-banking financial institutions are growing fastest because they serve underserved clients with faster processing, digital platforms, and flexible credit criteria in countries with banking gaps.

In South America, a large portion of small businesses cannot access bank loans due to strict collateral rules, slow documentation, or low credit scores. Non-banking financial institutions (NBFIs) step in to offer factoring services without the red tape. These firms, including fintech startups and credit cooperatives, use technology to onboard clients in less than 48 hours, process invoices instantly, and settle payments in real time. Traditional banks in Brazil, Argentina, and Peru often avoid smaller or informal businesses due to high perceived risks and regulatory limits, leaving a funding vacuum. NBFIs fill this gap with algorithm-based credit assessments, alternative data evaluation, and automated approval systems.

They also serve clients in rural or less-banked areas where formal bank branches are limited. In countries like Colombia and Chile, digital lenders and online factoring platforms have scaled up operations by integrating APIs with e-invoicing systems and tax records. This speeds up verification and reduces fraud, helping NBFIs disburse funds more quickly. Many of these providers use revenue-sharing models or dynamic discounting based on real-time sales data, which is not offered by traditional banks. In markets with high inflation and unstable interest rates, NBFIs can modify pricing flexibly, offering short-term liquidity even during economic downturns. Some NBFIs also partner with B2B marketplaces, allowing buyers and sellers to settle invoices digitally via factoring at checkout. Their agility, mobile-first approach, and ability to price risk independently from credit bureaus allow them to dominate the underserved SME financing space. This is especially true in countries like Brazil, where central bank-backed fintech policies enable smooth operations outside the traditional banking sector.

Small and medium enterprises dominate because they rely on factoring to manage delayed payments, cash shortages, and credit access issues in underbanked regions.

In South America, small and medium enterprises (SMEs) form the backbone of most economies, contributing more than 60% of employment in countries like Brazil, Colombia, and Argentina. However, these businesses often face delayed invoice payments, sometimes stretching beyond 90 days, which creates severe cash flow stress. In Argentina, Ualá raised $300 million led by Allianz X to scale fintech services including supplier financing for SMEs across Argentina, and Colombia. Banks typically hesitate to lend to SMEs due to informal bookkeeping, insufficient collateral, or lack of credit history.

Factoring emerges as the preferred financing route for such firms, enabling them to convert receivables into working capital without going into long-term debt. SMEs prefer this method because it doesn’t require fixed assets as security. With domestic consumption patterns changing frequently and inflation putting pressure on inventory costs, many SMEs in sectors like food processing, logistics, apparel, and electronics depend on factoring to maintain operations. Also, SMEs in South America often deal with large retail chains or distributors who delay payments, and factoring helps bridge that gap. The increasing digitalization of tax records, such as Brazil’s Nota Fiscal Eletrônica (NF-e), has allowed SMEs to connect directly with fintech-based factoring platforms, reducing entry barriers and transaction costs. Some factoring firms offer services tailored specifically for SMEs, including dynamic discounting, short-tenure cycles, and buyer-specific risk assessment. These features make factoring attractive even to micro-enterprises and startups. Government-backed development banks in Brazil and Chile also fund or partner with SME-focused factors, creating broader access.

Brazil leads due to its high invoice volume, robust legal infrastructure, and widespread use of electronic invoicing that enables factoring growth at scale.

Brazil holds the largest share in South America’s factoring services market because of its diversified economy, high concentration of SMEs, and digital infrastructure that supports real-time invoice processing. The Brazilian market generates billions in receivables annually, especially from sectors like retail, agribusiness, construction, and healthcare, where delayed payments are common. The widespread use of the Nota Fiscal Eletrônica (NF-e), Brazil’s electronic invoicing system, allows factoring companies to verify invoices instantly and detect fraud easily. The country has well-defined regulations around factoring, classifying it as a commercial not financial activity, which makes it easier for both bank and non-bank entities to operate.

Fintech adoption is also high, with many platforms offering factoring as part of embedded finance in ERP tools, retail systems, or payment gateways. Banks and independent finance companies actively participate in Brazil’s factoring space, supported by investor demand for receivables-backed assets. SMEs across São Paulo, Minas Gerais, and Rio de Janeiro regularly use factoring to manage liquidity, especially when client payment terms extend to 90 or 120 days. The market also benefits from support by local development banks and trade associations that promote invoice financing as a business enabler. Inflation volatility and high interest rates make short-term factoring a more affordable option compared to traditional bank credit. The country’s mature credit scoring ecosystem, combined with integration into digital tax records, allows factoring firms to assess risk and onboard clients efficiently.