The International Factoring Association (IFA), the world’s largest and most recognized group of commercial finance companies, released their recent survey results regarding trends and developments in the field of accounts receivables financing.
The report, which independently surveyed nearly 200 financing and invoice factoring companies of all sizes, revealed a wide range of key industry information, including which industries use invoice factoring the most. The report is highly regarded in the industry and is used as a bellwether to determine overall industry health and performance.
Invoice Factoring Trends Revealed
According to the invoice factoring industry report, more than one-third of companies surveyed have been in business at least 15 years. This means there are plenty of established and knowledgeable accounts receivables financing companies out there competing for your business.
Despite the many long-term factoring companies, the survey results found that there’s also a sizable and fast-growing group of companies that are new to the scene and have only been in business five years or less. This group accounts for approximately one-quarter of all invoice factoring companies. As demand for factoring receivables and other commercial financing options continues to grow, more and more alternative financing companies are being formed to meet this rising demand.
Factoring Funds the Larger Trucking and Freight Sector
It is no surprise to those in and around the factoring business that transportation, comprised of trucking, rail and freight, use invoice factoring more than any other industry. Specifically, invoices factored by freight factoring companies make up more than a third (36.4%) of all invoices processed for funding.
Trucking businesses routinely rely on freight bill factoring to finance their business operations. Financing is often performed on a load-by-load basis so the carrier does not have to wait to be paid by the client. The flexibility of transportation factoring works well with this industry’s business cycle which can be hard to predict and uneven.
Many freight factoring companies will work with newly formed and early stage businesses, including companies with only a handful of trucks. Most banks require a certain number of years in business, a history of revenue growth and profitability, and a high credit score to qualify for a business loan. As many small or very new trucking companies fall short of these qualifications, freight factoring can be a more accessible financing option.
IFA Report Sets the Industry Standard
Invoice factoring companies that are members of the IFA can receive company specifics and reporting, including performance comparisons between similar companies. The report serves as an invaluable tool for these firms in order to show them opportunities for growth and potential areas of improvement.