Invoice Factoring in the US - Industry Market Research Report

Invoice Factoring in the US - Industry Market Research Report

Invoice Factoring

The Invoice Discounting industry has a low level of concentration with only one operator accounting for more than 5.0% market share in 2019. Over the five years to 2019, market share concentration has decreased as more operators enter the industry to satisfy a growing demand for invoice discounting services.

Smaller operators threaten larger establishments

• Although major players, such as Wells Fargo, control a relatively large percent of market share, smaller companies, such as Fundbox, are leveraging advanced computer modeling techniques to create opportunities. This enables them to operate efficiently even when the overall economy might be constrained, which becomes a significant advantage as they continue to serve smaller businesses that need access to credit.

Increased competition lowers profit

• Both commercial banks and newer financial technology, or fintech, companies that operate in the industry rely on fees for revenue. As a result, competition is based on price, and as more fintech companies enter the industry using big data analytics and predictive modeling to manage risk, profit is expected to decline. Accordingly, as profit decreases, commercial banks have the advantage of diversified revenue streams, which enables them to weather more competitive periods. Conversely, small fintech startups are expected to experience more difficulty for that same reason, and will likely exit the industry altogether.

Firms in this industry specialize in short-term debt financing. Factoring involves a company selling its account receivables 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. Operators generate revenue through factor fees, or the difference between the price paid for the invoice and money received from debtors.

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.