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• 03 Feb

  Debt Factoring Predictions for 2010

  As we enter 2010 it seems a good time to think about what is likely to change in the debt factoring and invoice discounting markets during the course of the year.

  Recent reports suggest that there has been a very modest uplift in the economy - 0.1% growth - hardly impressive by any standards, but possibly an end to the recession. It remains to be seen how much growth will be achieved in the next set of results.

  Market conditions still seem tough and there are other issues such as the prospect of rising interest rates, inflation, the loss of the car scrappage scheme and the increase in the rate of VAT that are all likely to take their toll and continue to depress the general economy.

  Predictions for the debt factoring market for the rest of 2010 include:

  1. Factors Breaking Ranks - until recently the majority of the factors were taking similar, conservative risk stance (being increasingly selective about the type of business they will handle) and almost all of them had increased their costings. It is likely that the recent slow down in the level of bad debts suffered will entice some front runners within the industry to break ranks with the other factors and start to market more agressively for new business - good news for clients. Already we are starting to see a few recruitment adverts for sales managers, sales directors and client managers by some factors.
     
     
  2. Increased Competition On Factoring Charges - the above changes are likely to give rise to some increased competition regarding factoring charges as factors start to compete with the industry front runners on rates - again good for new entrants to the market.
     
     
  3. Acquisitions & Mergers - the market has been tough and has contracted in terms of the actual number of clients using these services. This has encouraged some factors to pursue the acquisition of other factoring companies in order to satisfy their ambitions for growth. Whilst the market may return to some degree of modest growth during 2010 it is likely that we will see further acquisitions of smaller factoring companies by those occupying the middle ground - many factors are still hungry for potential targets to acquire so there is likely to be some element of futher consolidation this year. On the face of it perhaps that is not good for client choice, however, there are still going to be plenty of choices within the market.

  More predictions for 2010 tomorrow.

  By Glenn Blackman