INDUSTRY REPORT OD5407

Invoice Factoring

Working capital: The flexibility and greater collection of accounts receivable is not likely
to offset revenue declines

Vlad Khaustovich | May 2022

IBISWorld.com 1-800-330-3772 [email protected]

Invoice Factoring May 2022

Contents
COVID-19 (Coronavirus) Impact Update.............................3 COMPETITIVE LANDSCAPE.......................... 20
ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 20
Key Success Factors........................................................20
Industry Definition................................................................5 Cost Structure Benchmarks............................................. 21
Major Players...................................................................... 5 Basis of Competition......................................................... 23
Main Activities..................................................................... 5 Barriers to Entry............................................................... 24
Supply Chain....................................................................... 6 Industry Globalization........................................................ 24

INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 26

Executive Summary............................................................ 9 Market Share Overview..................................................... 26
Related Companies........................................................... 26
INDUSTRY PERFORMANCE..........................10 Wells Fargo & Company................................................... 27

Key External Drivers.........................................................10 OPERATING CONDITIONS............................ 29

Current Performance........................................................ 11
Capital Intensity................................................................. 29
INDUSTRY OUTLOOK.................................... 13 Technology & Systems......................................................29
Revenue Volatility..............................................................30
Outlook.............................................................................. 13 Regulation & Policy........................................................... 30
Industry Life Cycle............................................................. 15 Industry Assistance........................................................... 32

PRODUCTS & MARKETS............................... 16 KEY STATISTICS............................................ 33

Supply Chain..................................................................... 16 Industry Data..................................................................... 33

Products & Services.......................................................... 16 Annual Change..................................................................33
Demand Determinants...................................................... 17 Key Ratios......................................................................... 33
Major Markets....................................................................17
Business Locations........................................................... 18 ADDITIONAL RESOURCES............................34
Additional Resources........................................................ 34
Industry Jargon..................................................................34
Glossary............................................................................ 34

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COVID-19 IBISWorld's analysts constantly monitor the industry impacts of current events in real-time here is an update of
(Coronavirus) how this industry is likely to be impacted as a result of the global COVID-19 pandemic:

Impact Update Revenue for the Invoice Factoring industry has been adjusted to decline 3.6% in 2020 alone due to overall lower
demand.

Supply chain issues caused by the COVID-19 (coronavirus) pandemic continue to affect industry operators and
their clients in 2022.

Increased liquidity in the economy during the pandemic has contributed to lower demand for industry services.

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About IBISWorld
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are truly global in nature.

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About This Industry

Industry Definition 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.

Major Players Wells Fargo & Company

Main Activities The primary activities of this industry are:

Providing recourse factoring

Providing non-recourse factoring

Providing reverse factoring

The major products and services in this industry are:

Recourse factoring

Non-recourse factoring: small enterprises

Non-recourse factoring: medium enterprises

Non-recourse factoring: large enterprises

Reverse factoring

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Supply Chain

SIMILAR INDUSTRIES

Commercial Banking in the US Savings Banks & Thrifts in the US Real Estate Loans & Loan Administration, Check
Collateralized Debt in the US Cashing & Other Services in the US

RELATED INTERNATIONAL INDUSTRIES

Debt Collection in Australia Factoring in the UK Credit Reporting and Debt

Collection Services in New
Zealand

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Industry at a Glance
Key Statistics Key External Drivers % = 2017 22 Annual Growth

$3.9bn 0.4% 5.1%

Revenue Number of businesses Corporate profit

Annual Growth Annual Growth Annual Growth

0.6% 0.2pp
Business sentiment index Prime rate
2017 2022 2022 2027 2017 2027
3.4%
0.1% -1.4% Access to credit

$1.2bn Industry Structure

Profit
POSITIVE IMPACT
Annual Growth Annual Growth
Capital Intensity Concentration
2017 2022 2017 2022
Low Low
-1.0% Industry Globalization
Low / Steady

MIXED IMPACT
31.0% Life Cycle Revenue Volatility
Profit Margin Mature Medium

Annual Growth Annual Growth Regulation & Policy Technology Change

Medium / Increasing Medium
2017 2022 2017 2022
Barriers to Entry Competition
-1.7pp Medium / Increasing Medium / Increasing

NEGATIVE IMPACT
Industry Assistance
382 None / Steady
Businesses

Annual Growth Annual Growth Annual Growth

2017 2022 2022 2027 2017 2027 Key Trends

0.2% -0.6%
Demand for invoice factoring has increased slightly

The speed at which potential borrowers can be approved

has improved
5,254 Increased access to credit offered by commercial banks
Employment
reduced demand for the alternative financing solutions
Annual Growth Annual Growth Annual Growth offered by this industry

2017 2022 2022 2027 2017 2027 Key international industry associations contend that criticism
of invoice discounting companies is overstated
-0.2% -1.0%
Increasing access to credit forecast during the outlook
period will temper industry revenue declines

Industry operators' investments in technology will contribute

$455.9m to reduced demand for labor
Wages
Industry offerings tend to improve working capital access for
Annual Growth Annual Growth Annual Growth
clients at a faster rate than traditional bank lending
2017 2022 2022 2027 2017 2027

2.0% -0.6%

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Products & Services Segmentation

Major Players SWOT

STRENGTHS

Low Imports
High Profit vs. Sector Average
Low Customer Class Concentration
Low Product/Service Concentration
Low Capital Requirements

WEAKNESSES

None & Steady Level of Assistance

OPPORTUNITIES

High Performance Drivers

Prime rate

THREATS

Very Low Revenue Growth (2005-2022)

Low Revenue Growth (2017-2022)
Low Outlier Growth
Low Revenue Growth (2022-2027)
Access to credit

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Executive Summary Working capital: The flexibility and greater collection of accounts
receivable is not likely to offset revenue declines
Increased access to credit has led to volatile demand for services provided by the Invoice Factoring industry over
the five years to 2022. Due to growing competition from commercial banks, industry revenue is anticipated to
stagnate, rising at an annualized rate of 0.1% to $3.9 billion over the five years to 2022, including an expected
decline of 1.6% in 2022 alone. The outbreak of the COVID-19 (coronavirus) led the government to increase liquidity
in the economy, contributing to lower demand for factoring services in 2020. In 2021, supply chain issues led factors
to increase the level of verification as late deliveries increased the risk of dilution and unpaid invoices. In 2022, the
industry is expected to experience significant headwinds between rising inflation, interest rates and continuous
supply chain issues.

In factoring, businesses sell their unpaid invoices to a factoring company, which then collects the outstanding
payment from the customer. Clients enter factoring agreements to mitigate cash flow risk and receive a short-term
injection of working capital. Industry offerings tend to improve working capital access for clients at a faster rate than
traditional bank lending, in addition to providing enhanced flexibility. Nevertheless, industry operators have struggled
to compete with traditional sources of funding during the current period. Moreover, several barriers exist to the
broad-based adoption of invoice discounting, including the lack of awareness among downstream clients and the
perceived complexity of industry services.

Over the five years to 2027, industry revenue is expected to decline at an annualized rate of 1.4% to $3.6 billion.
While demand for industry services from the transportation sector is expected to remain strong, strong competition
from alternative sources of funding is expected to hamper demand from other sectors. By product lines, demand
from non-recourse factoring is expected to stagnate, while demand from recourse factoring is expected to decline,
driving industry revenue down overall. While industry revenue is expected to decline, industry wages are forecast to
grow, driven by growth in the average wage. As total wages increase, industry profit is anticipated to decline due to
rising wage expenses. Meanwhile, mergers and acquisitions in the industry are expected to continue, contributing to
growing market share concentration over the next five years.

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Industry Performance

Key External Access to credit

Drivers
Access to credit is calculated as the borrowing capacity advanced by commercial banks in the form of loans, cash
credit and overdrafts. Increases in access to credit generally denote an improving aggregate lending market and a
stronger economy, which benefits small businesses. However, commercial bank lending presents a potent form of
external competition, with increased access to credit holding the potential to decrease industry demand. Access to
credit is expected to increase in 2022, posing a potential threat to the industry.

Corporate profit

Increases in corporate profit typically indicate an improving macroeconomic landscape. In addition, mounting
corporate profit levels tend to reduce the risk involved in lending, as businesses are in the financial standing to more
easily pay off their debt. However, to the detriment of industry revenue, rising corporate profit also has the potential
to reduce the need for invoice financing among downstream clients. Corporate profit is expected to increase in 2022.

Prime rate

The prime rate is the interest rate charged by commercial banks to their largest corporate customers. In general,
changes in the interest rate charged on most of a bank's products stem from changes in the prime rate. When
interest rates increase, traditional loan products become more expensive, improving the competitive advantage of
nonbank financing provided by industry operators. The prime rate is expected to increase in 2022, presenting a
potential opportunity for the industry.

Business sentiment index

The business sentiment index is highly correlated with the current state of the economy; consequently, as the
entrance of new businesses leads to increased financing opportunities, improving business sentiment is also
positively correlated with industry revenue. Moreover, when businesses become more confident about their future
prospects, they often attempt to increase their scale, frequently requiring financing products such as those provided
by industry operators. The business sentiment index is expected to decrease in 2022.

Number of businesses

Industry operators generate all their revenue from business clients, particularly those in the service, manufacturing
and distribution sectors. An aggregate increase in the number of domestic businesses affords industry operators
additional opportunities to provide invoice discounting services. The number of businesses is expected to increase
in 2022.

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Current Over the five years to 2022, increased access to credit has enabled more
Performance businesses to finance invoices without the aid of the Invoice Factoring
industry.
A favorable domestic economy and an expanded array of lending options from traditional banks have enabled small
businesses to return to traditional methods of financing. In general, industry operators in the Invoice Factoring
industry provide short-term financing for businesses to improve their cash flow position and mitigate payment risk.
Unlike invoice discounting, invoice factoring involves a purchase of account receivables from a client. Therefore,
clients pay directly to the factor under the factoring agreement.

During the five-year period, demand for invoice factoring services increased only marginally as a form of short-term
financing for small- and medium-sized businesses. Growth in revenue has been largely driven by growing demand
for non-recourse factoring. Nonetheless, consistent technological developments among industry operators have
continued to expand the list of advantages that invoice discounting maintains over other forms of accounts
receivable financing. Still, many barriers exist to the broad-based adoption of industry services. As a result, industry
revenue increased at a slim annualized rate of 0.1% to $3.9 billion over the five years to 2022. In 2022 alone,
revenue is expected to fall 1.6% as key markets exhibit unfavorable conditions for the industry. Even though
businesses may have access to short-term financing, long-term outlooks are still depressed, leading to weaker
demand for the industry services.

EXPLANATIONS OF PERFORMANCE

The primary reasons for the slight increase in the use of invoice factoring
during the period pertain to the cash flow risk of downstream clients.
Small- to medium-sized enterprises have been historically limited with respect to their access to short-term working
capital. Moreover, in periods of economic downturns such as the financial crisis of the late 2000s, banks were
reluctant to lend to these businesses. Thus, invoice factoring has remained attractive to clients who want to meet
their short-term financing needs and reduce the risk on unpaid accounts receivable.

However, during the five-year period, elevated corporate profit reduced the need for forms of invoice financing
among downstream clients. As a result of decreased demand, industry revenue declined early in the period. In
addition, increased access to credit offered by commercial banks reduced demand for the alternative financing
solutions offered by this industry. Over the five years to 2022, access to credit grew at an annualized rate of 3.4%.
While the outbreak of the COVID-19 (coronavirus) pandemic has not affected the Invoice Factoring industry as
much as some other industries within the financial sector, fewer businesses were willing to expand their operations
during the early days of the pandemic. Moreover, additional liquidity provided by the government also had a

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negative effect on factoring services, contributing to a 3.6% decline in industry revenue in 2020.

Nonetheless, invoice financing provides a range of advantages over traditional bank loans for businesses. The
short-term financing provided by industry operators enables companies with complex payment structures to mitigate
payment risk, enabling them to expand their operations more rapidly. In addition, developments in machine learning
technology have increased the speed at which potential borrowers can be approved for financing. Industry operators
have rapidly accumulated clientele by providing a variety of invoice financing, lines of credit and small business
loans online. Digital technologies deployed by operators maximize user convenience and increase the probability of
full retrieval of outstanding accounts receivable.

TECHNOLOGY IMPROVES EFFICIENCY

To increase efficiency and expand their client base, industry operators

have increasingly invested in technological systems.
These systems largely provide access to information regarding downstream debt collection and existing invoice
discounting engagements, either on a real-time, daily or weekly basis. Many industry operators today can provide
capital via direct deposit within a business day. According to the data from working capital provider Demica, most
factoring companies have systems in place that offer daily updates regarding debt collection. Improved risk
management and efficiency, particularly in regard to lower operational expenditures, are largely the key motivating
factors for technological investment on behalf of industry operators.

INDUSTRY STRUCTURE

Overall, an increase in demand for innovative working capital solutions is

expected to attract new entrants into the industry over the five years to
2022.
The industry will persist as an attractive solution for mitigating payment risk among small enterprises. However,
stagnating revenue and declining profit are expected to encourage some operators to exit the industry.
Consequently, the number of industry enterprises is anticipated to increase at an annualized rate of 0.2% to 382
companies over the five years to 2022. Employment is expected to decrease only slightly, decreasing an annualized
0.2% over the five years to 5,254 workers in 2022. Meanwhile, wages are expected to increase at an annualized
rate of 2.0% to $455.9 million in 2022, driven by growth in the average wage per employee nationwide. In particular,
growth in the average wage has been one of the factors driving industry profit down over the past five years.

Historical Performance Data

Domestic Access to
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Credit
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) ($b)
2013 5,464 2,063 766 405 5,180 N/A N/A 358 N/A 8,445
2014 4,739 1,956 771 390 4,674 N/A N/A 340 N/A 8,727
2015 4,384 1,929 784 388 4,857 N/A N/A 351 N/A 9,314
2016 4,093 1,746 802 401 4,972 N/A N/A 375 N/A 9,937
2017 3,848 1,702 822 378 5,311 N/A N/A 412 N/A 10,157
2018 4,026 1,826 826 389 5,383 N/A N/A 437 N/A 10,378
2019 4,250 1,902 836 390 5,545 N/A N/A 474 N/A 10,715
2020 4,098 1,819 828 386 5,425 N/A N/A 466 N/A 11,291
2021 3,927 1,725 820 382 5,287 N/A N/A 457 N/A 10,831
2022 3,863 1,687 819 382 5,254 N/A N/A 456 N/A 10,568

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Industry Outlook
Outlook The benefits of nonbank lending offered by the Invoice Factoring industry,
including the speed and flexibility with which industry funds can improve
a client's cash flow position, are not anticipated to offset negative effects
from increased corporate profit and access to credit over the five years to
2027.

Due to forecast increases in access to credit offered by commercial banks during the outlook period, industry
operators are anticipated to experience mounting external competition from traditional financing solutions. However,
much is still to be determined as the economy recovers from the effects of the COVID-19 (coronavirus), and financial
regulators continue to make decisions that are expected to have a long-lasting effect on the economy.

Demand for factoring services from transportation companies is expected to remain strong. IBISWorld expects the
freight transportation service index to grow at an annualized rate of 1.8% over the five years to 2027, benefiting the
Invoice Factoring industry. However, strong competition from alternative sources of funding is expected to suppress
revenue growth overall. Moreover, demand from recourse factoring will likely continue to decline, while demand from
non-recourse factoring is expected to stagnate. Overall, industry revenue is expected to decrease at an annualized
rate of 1.4% over the five years to $3.6 billion in 2027.

REGULATORY DIFFERENCES AND CRITICISM

According to the Financial Times, the growth of invoice factoring is

largely a result of the less strict regulatory environment surrounding
these services compared with traditional loans and overdrafts.
However, criticism of the industry has increased, as some providers have been disparaged for their excessive
charges or for putting companies that have struggled to make payments into insolvency. Nevertheless, key
international industry associations contend that this criticism of invoice factoring companies is overstated. The Asset
Based Finance Association, a UK-based association that represents providers of factoring, invoice discounting and
asset-based lending, has stated that critics have exaggerated the extent of predatory practices, with complaints
stemming from less than 1.0% of clients that have used these nonbank products.

Despite growth in underlying demand due to growth in the number of businesses, increasing access to credit
forecast during the outlook period will temper industry revenue declines. As commercial banks increase their lending
capacity to small- and medium-sized businesses, these commercial bank loans are increasingly suitable to finance
unpaid accounts receivable. Therefore, mounting external competition from commercial banks is expected to reduce
profit over the next five years, resulting in some operators exiting the industry. Rising internal competition for
creditworthy borrowers will also drive down invoice factoring revenue, limiting profit growth. The industry's average
profit margin is forecast to fall during the five-year period to 29.9% of revenue in 2027, down from 31.0% in 2022.
Additionally, the industry is expected to consolidate as larger and more profitable players attempt to acquire smaller
companies operating in niche markets. Therefore, the number of industry enterprises is expected to decrease at an
annualized rate of 0.6% to 371 companies over the five years to 2027. Industry operators' investments in technology
will also contribute to reduced demand for labor. Consequently, industry employment is expected to fall at an
annualized rate of 1.0% to 5,008 workers over the five years to 2027.

COMPETITION FROM INVOICE DISCOUNTING

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Companies that use asset-based lending services often choose between

invoice factoring and invoice discounting.
One of the reasons of choosing invoice discounting over full factoring is its comparatively lower cost for some
companies. Other crucial reasons include the very competitive and saturated market for full factoring services and
the increasing desire among downstream companies to maintain control over their sales ledgers and customer
relationships. Invoice discounting is a suitable form of accounts receivable financing for many small enterprises with
volatile trends in customer payment. For example, companies that operate in construction or manufacturing sectors
and manage payment from various contractors may be ideal invoice discounting clients, given that companies must
seek repayment for services rather than the return of physical goods. Competition from invoice discounting services
is expected to remain strong over the five years to 2027, encouraging industry operators to launch new initiatives
and invest more heavily in technology.

Performance Outlook Data

Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Access to
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Credit ($b)
2022 3,863 1,687 819 382 5,254 N/A N/A 456 N/A 10,568
2023 3,778 1,638 814 380 5,191 N/A N/A 453 N/A 10,791
2024 3,729 1,610 811 378 5,154 N/A N/A 451 N/A 11,065
2025 3,688 1,588 807 377 5,110 N/A N/A 449 N/A 11,369
2026 3,662 1,576 803 375 5,076 N/A N/A 447 N/A 11,692
2027 3,607 1,550 795 371 5,008 N/A N/A 441 N/A 12,028
2028 3,552 1,525 788 368 4,941 N/A N/A 436 N/A 12,372

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Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS

Industry value added is expected to decrease over the 10 years to 2027

Growing technological innovation is expected to reduce costs
The number and type of downstream businesses relying on invoice discounting continues to grow

The Invoice Factoring industry is in the mature stage of its economic life cycle; this stage is characterized by
moderate growth in industry enterprises, established downstream customers and strong correlation with economic
factors such as the prime rate and number of businesses. Industry value added (IVA), which measures an industry's
contribution to the overall economy, is expected to decrease at an annualized rate of 0.9% over the 10 years to
2027. In contrast, US GDP is projected to grow at an annualized rate of 2.0% during the same period. Typically, an
industry is considered to be in the decline phase of its economic life cycle when IVA growth is less than that of the
overall economy during a 10-year period. However, due to product innovation that will attract new customers to the
industry, in addition to substantial underlying demand for invoice financing services, the industry is considered to be
mature. Nevertheless, the industry has experienced pressure for other sources of funding, which will likely translate
into declining revenue over the five years to 2027.

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Products & Markets

Supply Chain Key Buying Industries Key Selling Industries
1st Tier 1st Tier

Transportation and Warehousing in the US Commercial Banking in the US

Construction in the US Credit Unions in the US

Manufacturing in the US Trusts & Estates in the US

Wholesale Trade in the US

Retail Trade in the US

Products & Services

NON-RECOURSE FACTORING

Non-recourse factoring is the largest product segment in the Invoice

Factoring industry, accounting for 69.2% of industry revenue in 2022.
This type of factoring represents an invoice purchase agreement that transfers all risks associated with unpaid
invoices to the factoring company. However, the costs associated with additional risks are compensated in different
ways. For example, advance rates may be lower, while factor fees may be higher for non-recourse factoring services
when compared with recourse factoring. The share of non-recourse factoring revenue is distributed somewhat
proportionally across different company sizes. Small businesses that use non-recourse factoring services represent
18.0% of overall factoring services in 2022. Medium-size and large companies that use non-recourse services are
expected to account for 27.0% and 24.2% of factoring revenue in 2022, respectively. Overall, the share of non-
recourse factoring services is expected to increase over the five years to 2022.

RECOURSE FACTORING

Recourse factoring is the second-largest product segment, accounting for

20.1% of industry revenue in 2022.
Companies that use recourse factoring stay liable for unpaid invoices. Recourse financing often offers higher
advances and lower factor fees in exchange for reduced risk. In many cases, the factor may recourse the invoice
back to its client if the invoice is unpaid after 90 days. However, the factor often provides options for its clients to
cover the cost. Such options may include withholding a portion of future cash advances or deducting cash from the
client's reserve account. Overall, the share of recourse factoring services has experienced a substantial decline over
the five years to 2022.

REVERSE FACTORING

Reverse factoring is expected to represent 10.7% of industry revenue in

2022.
The main difference between reverse factoring and other forms of factoring is that in reverse factoring, the client is a

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debtor of its supplier. In other forms of factoring, the client is a debtor of its creditor. Therefore, a reverse factoring
contract is an agreement by which the factor provides management and financing services to the client and the
client's supplier. Reverse factoring is estimated to have increased over the five years to 2022. Meanwhile, the
outbreak of the COVD-19 (coronavirus) pandemic has caused many supply chain issues, affecting demand for
reverse factoring in 2020.

Demand Demand for invoice discounting depends on the level of business activity
Determinants and the state of credit markets.
Companies use Invoice Factoring industry services when they require capital to grow their business, which in turn
depends on demand for their own products and services and their confidence in future economic conditions. In
addition, companies are more likely to turn to alternative forms of finance, such as invoice factoring, during a
tightened credit market when banks' strict lending standards prevent immediate access to capital or restrict how
borrowers can use capital. Rising interest rates also increase the cost of borrowing from banks as rates on
traditional loans become more expensive, thereby boosting demand for industry services.

Access to credit and interest rates rise as macroeconomic conditions improve. Access to credit increases as banks
expand their lending capacity, enabling businesses to attain capital from these institutions more easily. Since
industry operators compete with global and domestic commercial banks, regional and community banks and other
financial institutions that provide lending, increased access to credit has the potential to decrease demand for
alternative financing, such as invoice discounting. However, these commercial bank loans are not as flexible as the
short-term financing provided by industry operators. These innovative payment solutions and flexible lines of credit
have the potential to improve the competitive advantage of nonbank financing provided by industry operators.

Demand for industry services is also driven by demand from downstream markets, namely manufacturing,
transportation and construction. Demand from downstream markets can be seasonal. For example, demand from
trucking companies tends to be lower in the first quarter of the year, which is consistent with trends in road trucking.
Likewise, construction activity tends to be lower during the winter months. In addition to seasonality, demand from
the mentioned downstream markets typically rises when the overall economy grows. Thus, government investments
and the level of exports have an effect on the Invoice Factoring industry as well.

Major Markets

MANUFACTURING

Manufacturers are estimated to represent 41.0% of Invoice Factoring

industry revenue in 2022.
This sector includes producers of apparel, chemicals, consumer electronics, home furnishings and food, among
other goods. Industry operators purchase invoices that represent sales of these items. Manufacturers use this cash
to pay suppliers earlier, buy in larger quantities and take advantage of any vendor discounts for buying in bulk.
Demand for industry services is particularly strong from manufacturers that have ties with volatile commodity
markets, such as chemical and industrial gas manufacturers.

DISTRIBUTION AND TRANSPORTATION

Distribution and transportation companies are expected account for

38.0% of industry revenue in 2022.
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While factoring used to be uncommon, it has become one of the most popular funding methods for trucking and
related companies. The major challenge for such companies is represented by a substantial delay in collecting cash,
which can last between 30 and 60 days after they drop off the goods. While waiting to get paid, such companies
continue to incur fixed costs, resulting in lower profit. By optimizing their cash flow, distribution and transportation
companies can reduce average costs, leading to higher profitability.

CONSTRUCTION, SERVICES AND OTHER

Construction, services and other markets are expected to account for

21.0% of industry revenue in 2022.
Construction companies often have costs that are non-negotiable, such as payroll, equipment, insurance and legal
fees. Moreover, construction businesses often need to have extra capital to cover unexpected costs such as
lawsuits, overtime hours and unrealistic deadlines. By using invoice factoring services, construction businesses
ensure they have enough cash to cover both expected and unexpected expenses. Service industries include
educational institutions, healthcare organizations and professional services. As these services industries tend to
benefit from fairly stable and upward trending demand, this sector has generated a consistent share of industry
revenue over the five years to 2022. However, the COVID-19 (coronavirus) pandemic has heavily affected many
service industries, resulting in weaker demand for this segment in 2020.

Exports in this industry are Low and Steady

Imports in this industry are Low and Steady

Due to the service-based nature of invoice factoring, there is no international trade in the Invoice Factoring industry.
Moreover, invoice factoring is typically provided locally, leading to a low level of globalization. See the Industry
Globalization section of this report for more information.

Business
Locations

Invoice factoring providers are concentrated near heavily populated business centers. Invoice Factoring industry operators

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primarily compete with banks, the largest of which have well-developed distribution networks. However, industry operators also
service areas that historically have insufficient access to traditional financing from banks. According the FDIC, the southern region
of the United States is composed of the nation's most under-banked states, meaning a significant share of households use
alternative financial services to meet their needs. As a result, the majority of establishments are located in the Southeast and
Southwest.

Southeast

The Southeast region houses the largest share of industry establishments, with an estimated 36.1% of the total. This region also
includes two of the five largest states by establishments, with Georgia and Florida accounting for 5.5% and 6.2% of the total,
respectively. According to the FDIC, Georgia and Alabama (3.4% of establishments) are among the most under-banked states in
the country, with under-banked rates ranging from 22.0% to 31.2%. Florida follows with an under-banked rate ranging from 20.5%
to 22.0%. The Southeast is also the most populated region, and its large consumer base attracts industry operators.

Southwest

The Southwest region houses 19.5% of industry establishments. This is primarily the result of the large number of operators
located in Texas, which accounts for 13.9% of total establishments. According to the FDIC, Texas is similar to Georgia and
Alabama with an under-banked rate ranging from 22.0% to 31.2%. In addition, Texas has become a booming business center.
This has attracted industry operators seeking to provide growing companies with invoice discounting services, especially as
access to traditional financing remains insufficient.

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Competitive Landscape
Market Share
Concentration

Concentration in this industry is Low

The Invoice Factoring industry has a low level of concentration. Industry participants help improve a company's
working capital and cash flow position, competing with large banks as well as a growing number of other providers
of accounts receivable financing. Invoice factoring can give businesses immediate access to cash without having to
attain traditional loans, which can be accompanied by restrictions on the use of the bank's capital. Serving as an
alternative to traditional financing, many invoice factoring providers operate on a local basis, leading to a highly
fragmented industry.

Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Factors
Superior financial management and debt management:
Invoice factoring providers need to have excellent interest rate, credit and operational risk management processes.

Easy access for clients:

Industry operators compete on their ability to provide clients with easy access to capital to meet their financial
needs.

Having a diverse range of clients:

Industry operators that provide invoice factoring services to a range of clients in a variety of industries benefit from a
degree of protection against a downturn in one of its main markets.

Financial position of the company:

Industry operators must maintain a strong financial position to continually issue working capital against clients'
accounts receivables.

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Cost Structure
Benchmarks

Profit

Industry profit, defined as earnings before interest and taxes, is

expected to decrease marginally over the five years to 2022, falling to
31.0% of revenue in 2022, down from 32.7% in 2017. Wages' share of
revenue has increased during the five-year period. Meanwhile, revenue
has largely stagnated, leading to lower profit.

Wages

In 2022, wages are anticipated to account for 11.8% of total industry

revenue, representing an increase from 10.7% in 2017. The industry is
highly labor-intensive, relying on employees for each of its financing
offerings. A crucial basis of competition in the Invoice Factoring industry
is the ability to attract and retain talented employees. Industry operators
rely on a range of employees for financial, compliance, technical,
marketing, sales and support functions. In addition, the performance of
an industry operator is often determined by the quality of its executive
officers and management team.

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Purchases

The purchases segment of this industry's cost structure accounts for an

estimated 1.7% of industry revenue in 2022.

Marketing

Marketing costs account for an estimated 2.9% of industry revenue in

2022.

Depreciation

Depreciation is estimated to account for 0.8% of industry revenue in

2022.

Rent

Rent payments account for an estimated 1.6% of the industry's revenue

in 2022.

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Utilities

Utilities are expected to account for an estimated 0.2% of industry

revenue in 2022.

Other Costs

The Invoice Factoring industry has a myriad of other costs that account
for a large share of industry revenue. Components of the industry's
other costs include technology investments and insurance
requirements. Moreover, professional fees associated with legal, tax,
audit and consulting services all represent significant costs for industry
operators. Other costs are estimated to account for 50.0% of revenue in
2022.

Basis of Competition in this industry is Medium and the trend is Increasing

Competition
INTERNAL COMPETITION

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Invoice factoring providers compete on the basis of their pricing

structures, lending standards and procedures and knowledge of diverse
industries.
Invoice Factoring industry operators charge service and interest fees for their services. For companies seeking low-
cost, short-term capital, service charges are an important determining factor. Operators can also gain a competitive
advantage by having extensive knowledge of the industries that their clients operate in because they are more
aware of the particular challenges that their clients experience in these industries and can tailor solutions to their
specific needs.

EXTERNAL COMPETITION

Operators compete with providers of other forms of accounts receivable

financing, in which a company's unpaid sales are used as collateral for
capital.
Besides invoice factoring, the other main type of accounts receivable financing is discounting. The primary
difference between invoice discounting and factoring is that factoring providers are responsible for collecting
customer payments, rather than clients. Factoring may have the risk of clients not receiving customer payments to
the financier. However, this arrangement also lacks confidentiality, which can be a significant drawback for potential
clients. For companies that do not wish to disclose that they are using external financing, access to invoice
discounting is also essential.

Invoice factoring providers also compete with global and domestic commercial banks, regional and community
banks, private equity firms and other alternative financing providers. Many competitors in these industries are
significantly larger with substantial financial, technological and marketing resources. As highly regulated entities,
banks often benefit from more extensive risk management systems and access to low-cost capital. In addition, larger
competitors have more industry-specific knowledge, operating networks and transaction expertise and can take
advantage of economies of scale to improve productivity and lower costs.

Barriers to Barriers to Entry in this industry are Medium and the trend is Increasing
Entry
The Invoice Factoring industry has moderate barriers to Barriers to Entry Checklist
entry. While alternative financing providers contend with
lower levels of regulation than banking entities, growing Competition Medium
regulation in the overall financial sector is increasing
barriers to entry in the Invoice Factoring industry. Concentration Low
Participants that operate on a large enough scale can be
designated by the Financial Stability Oversight Council as
Life Cycle Stage Mature
nonbank systemically important financial institutions
(nonbank SIFIs) under the Dodd-Frank Wall Street
Reform and Consumer Protection Act. Once the rules are Technology Change Medium
finalized and implemented, nonbank SIFIs will be forced
to increase capital and liquidity levels, as well as comply Regulation & Policy Medium
with comprehensive capital analysis and review and
counterparty credit exposure limits. Increased regulation Industry Assistance None
may deter smaller participants and new entrants from
increasing the scale of their operations in the industry.

Beyond regulation, the increasingly competitive and

saturated market may deter potential entrants. The scale
of investment in technological systems to service clients
safely and cost-effectively also poses a barrier to entry.
Operators must have access to low-cost capital and
knowledge of diverse industries to attract clients.
Furthermore, industry participants must compete with
larger banks that have substantial financial, technological
and marketing resources. Larger operators can take
advantage of economies of scale to improve productivity
and lower costs, thereby offering their services at
competitive prices. This landscape can prevent new
entrants from succeeding in the industry.

Industry Globalization in this industry is Low and the trend is Steady

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Globalization
The Invoice Factoring industry has a low level of globalization. Due to the service-based nature of invoice factoring,
there is no international trade in this industry. Moreover, invoice factoring is typically provided locally, leading to a
low level of globalization. However, some of the larger lenders in the industry operate internationally. Major player
Wells Fargo & Company conducts factoring services in Canada and the United Kingdom in addition to its US
operations. Furthermore, some players operate multiple locations through franchises. Nevertheless, industry clients
are typically US-based companies that only operate domestically. While larger participants will continue expanding
abroad and foreign lenders will grow their operations in the United States, the fragmented nature of the industry will
cause globalization to remain low in coming years.

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Major Companies
Market Share Overview

Related Companies

Competitors Company Type Employee Segment Revenue ($m) Market Share (%) Profit ($m)

Wells Fargo & Company Laggard 500+ Employees 417.8 10.81 129.7

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Companies with 5.0% industry market share are displayed in the PDF version of this report. You can view insights for all companies associated
with this industry on my.ibisworld.com

Wells Fargo & Company

Company Overview
Brands & Trading Abbot Downing Wells Fargo Advisors Wells Fargo Advisors Financial Network LLC Wells Fargo Clearing
Services LLC Wells Fargo Rail Wells Fargo Securities
Names

Description Wells Fargo & Company is a public company headquartered in California with an estimated 248,000 employees. In
the US, the company has a notable market share in at least seven industries: International Trade Financing, Invoice
Factoring, Securities Brokering, Commercial Banking, Loan Administration, Check Cashing & Other Services,
Private Banking Services and Auto Leasing, Loans & Sales Financing. Their largest market share is in the
International Trade Financing industry, where they account for an estimated 12.1% of total industry revenue and are
considered a Golden Goose because they display medium to strong market share and strong profit, but slower
revenue growth than some of their peers.

COMPANY TYPE Public Company

TOTAL COMPANY $417.8m
REVENUE
EMPLOYEES 248,000

Other Industries Auto Leasing, Loans & Sales Financing in the US

Loan Administration, Check Cashing & Other Services in the US
Private Banking Services
Commercial Banking in the US
Securities Brokering in the US
International Trade Financing

Analyst Insights Wells Fargo s Wealth and Investment Management total revenue increased
Wells Fargo s Wealth and Investment Management (WIM) total revenue increased to $14.3 million in 2021 from
$13.2 million in 2020. This yearly increase was driven by the higher fees in its investment advisory and other asset-
based services, due to the higher market valuations of its WIM advisory assets. Additionally, total revenue of this
segment increased due to higher gains on its deferred compensation plan investments, which are included in its
other noninterest income. Overall, the higher increased market valuations of its WIM advisory assets can be credit
to the boom in prices caused by the responses to quell the economic turmoil caused by the coronavirus pandemic.

Balance Sheet COVID

Wells Fargo s Corporate and Investment Banking total revenue slightly decreased
Wells Fargo s Corporate and Investment Banking total revenue slightly decreased from $13.9 million in 2020 to
$13.8 million in 2021. The company explains that this decrease was driven by the lower net gains from its trading
activities which in turn were driven by its lower volumes of interest rate products and lower client trading activity
for equity products in 2020. Among other negative effects in the economy, the 2020 coronavirus pandemic caused
market volatility in the trading of equity products.

Balance Sheet COVID

An Increase in total revenue for its Consumer Banking and Lending Segment
Wells Fargo & Company (Wells Fargo) increased its total revenue for its Consumer Banking and Lending Segment
from $34.0 million in fiscal year 2020 to $34.9 million for fiscal year 2021. One of the causes of its increase is that
it received higher mortgage banking noninterest income in 2021 compared to 2020. Specifically, Wells Fargo
reports that this increase is related to the rescuritization of loans purchased from GNMA loan securitization pools
in 2020. Furthermore, the contrast is expounded by the losses in 2020 from the impact of interest rate volatility on
hedging activities due to the COVID-19(coronavirus)pandemic effect on the market.

Balance Sheet COVID

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Wells Fargo & Company

Company Overview
Industry Market Market Share
Share, Revenue
and Profit 10.81% -8.8%
Current Year Annual Growth
(2022)
(2018 22)

Industry Revenue

$417.8m -12.5%
Current Year Annual Growth
(2022)
(2018 22)

Profit Margin

31.04% -2.8%
Current Year Annual Growth
(2022)
(2018 22)

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Operating Conditions

Capital The level of capital intensity is Low

Intensity
The Invoice Factoring industry operates with a low level of
capital intensity. IBISWorld estimates that for every $1.00
spent on wages, the industry will allocate $0.07 in capital
investment. Similar to nonbank finance industries in
general, invoice factoring providers do not require a large
amount of fixed capital to provide lending to downstream
clients. Moreover, labor is required for each of the
industry's service offerings. However, many operators have
increased their investment in financial systems. These
systems provide access to information regarding
downstream debt collection and existing invoice
discounting deals. According to the data available from
Demica, the majority of factoring companies have systems
in place that offer daily updates concerning debt collection
trends, with a similar level of technological advancement
estimated for invoice discounting providers. Improved risk
management and efficiency are the motivating factors for
technological investment in the industry.

Technology & Potential Disruptive Innovation: Factors Driving Threat of Change

Systems

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Companies in the Invoice Factoring industry have harnessed technological

systems to maintain an advantage, investing to increase efficiency and expand
their client bases.
These systems largely provide access to information regarding downstream debt collection and existing invoice discounting
engagements, either on a real-time, daily or weekly basis. Many companies can provide capital via direct deposit within a
business day. Improved risk management and efficiency, particularly in regard to lower operational expenditures, are
largely the key motivating factors for technological investment on behalf of industry operators.

The level of technology change is Medium

Invoice Factoring industry operators have increasingly invested in

technological systems to service clients safely and cost-effectively.
Most of these changes are occurring through the internet, with user-friendly web-based platforms enabling clients and
operators to access secure information, transfer payments and monitor funds electronically. These systems provide
updates on clients' accounts on a real-time, daily or weekly basis. These advancements have improved operators' risk
management and data assessment capabilities. The added convenience of these systems has encouraged clients to
embrace new, low-cost distribution channels rather than more costly alternatives, such as paper statements. Technology
will continue to contribute to significant changes in payment systems, distribution channels, risk management and data
assessment.

Revenue The level of volatility is Medium

Volatility

IBISWorld estimates that the Invoice Factoring industry will exhibit a medium
level of revenue volatility over the five years to 2022.
While industry revenue has grown only slightly in recent years, invoice discounting maintains several benefits over
traditional lending products and factoring. These benefits include the less time-intensive and more flexible access to
working capital and the ability for downstream clients to maintain control over their sales ledgers. Revenue volatility for the
industry is largely the result of changes in the external lending market, particularly commercial banks. Any sharp changes in
the willingness for these traditional lenders to provide capital or in the interest rates charged by these competitors can alter
industry revenue for invoice discounting providers substantially.

Regulation & The level of regulation is Medium and the trend is Increasing
Policy
Invoice Factoring industry participants are subject to varying levels of
regulation depending on the scale of their operation.

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Providers of invoice factoring services that are part of larger banking entities are highly regulated, but those outside of
traditional financial institutions are only moderately regulated. Generally, larger operators are either bank holding
companies, which are governed by the Federal Reserve, or savings and loan holding companies, which are governed by
the Office of the Comptroller of the Currency (OCC). The Federal Deposit Insurance Corporation (FDIC) governs both of
these holding companies, however.

Outside of these institutions, operators can be designated as nonbank systemically important financial institutions (nonbank
SIFIs) by the Financial Stability Oversight Council (FSOC), which are subject to regulation under the Dodd-Frank Wall
Street Reform and Consumer Protection Act (DFA). Regulations are primarily in place to protect the integrity of the financial
system by minimizing risk. The extent of regulation and the cost of adhering to it raises this industry's barriers to entry. In
response to the COVID-19 (coronavirus) pandemic, industry operators were required to comply with nationwide and
statewide regulations aimed at reducing the spread of the disease.

FEDERAL RESERVE SYSTEM

The Federal Reserve is the federal supervisor and regulator for all US banks
and bank holding companies, including financial holding companies formed
under the authority of the Gramm-Leach-Bliley Act of 1999, and of state-
chartered commercial banks that are members of the Federal Reserve System.
In overseeing these organizations, the Federal Reserve seeks to promote the organizations' sound operation and
compliance with laws and regulations.

The Federal Reserve exercises important regulatory influence over entry into the US banking system and the structure of
the system through its administration of the Bank Holding Company Act, the Bank Merger Act (with regard to state member
banks), the Change in Bank Control Act (with regard to bank holding companies and state member banks) and the
International Banking Act. In carrying out its responsibilities, the Federal Reserve coordinates its supervisory activities with
other federal banking agencies, state agencies, functional regulators and the bank regulatory agencies of other nations.

THE OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

The OCC acts as the primary regulator of all federal and state-chartered thrift
institutions, which includes savings and loan holding companies.
The OCC also issues federal charters for savings and loan associations and banks and enforces regulations to ensure that
savings institutions operate in a safe manner. Prior to organizing or acquiring a thrift, a company is required to undergo a
rigorous application process during which the OCC intensively scrutinizes its proposed business plan for the insured thrift.
This review encompasses the capital structure, managerial experience and overall integrity of the company. The objective
of this process is to ensure that the applicant has the financial and managerial resources to assure that the thrift will be
operated in a manner that does not jeopardize the thrift or deposit insurance funds.

Based on the analysis of the application, the OCC assigns the holding company enterprise to one of two categories:
noncomplex (relatively low-risk) or complex (higher risk). Off-site monitoring of the holding company enterprise is conducted
between regularly scheduled examinations and includes a review of reports filed by holding companies. These reports
provide detailed information concerning the structure, activities, management and financial condition of the holding
company and its subsidiaries. The result of these regularly scheduled examinations is that savings banks and thrifts must
increase expenditures to comply with increasing regulation levels, hurting profit.

THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

The majority of bank holding companies and savings and loan holding
companies are members of the Depositor Insurance Fund (DIF).
The DIF is the result of the Federal Deposit Insurance Reform Act of 2005, which merged the Bank Insurance Fund (BIF)
and the Savings Association Insurance Fund (SAIF) into a new fund. Deposits are insured up to the applicable limits by the
FDIC, and such insurance is backed by the US government. Due to the financial crisis, the DIF reached its lowest level
since September 1993. The FDIC Board of Directors voted to require insured banks to prepay $45.0 billion in premiums to
replenish the fund to save it from insolvency.

As an insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of FDIC-insured
institutions. It may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or
order to pose a serious risk to the DIF. The FDIC also has the authority to initiate enforcement actions against savings
institutions, after giving the OCC an opportunity to take such action, and may terminate an institution's deposit insurance if it
determines that the institution has engaged in unsafe practices or is in an unsafe condition.

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The FDIC's deposit insurance premiums are assessed through a risk-based system under which all insured depository
institutions are placed into one of nine categories and assessed insurance premiums based upon their level of capital and
supervisory evaluation. Under the system, institutions classified as well-capitalized pay the lowest premiums, while
institutions that are less than adequately capitalized pay the highest premiums. Risk classification of all insured institutions
is made by the FDIC for each semiannual assessment period.

THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT (DODD-FRANK)

Signed into law in 2010, the Dodd-Frank Act addressed financial regulatory
reform for nearly every aspect of the financial services industry.
The Act focuses on enforcing consumer rights and increasing the security of financial information. Once the act was
passed, the Financial Stability Oversight Council (FSOC) was created to oversee and coordinate the efforts of the primary
US financial regulatory agencies in establishing regulations to address financial stability concerns. The FSOC can
designate industry operators as nonbank systemically important financial institutions (nonbank SIFIs) under the DFA. While
many of the rules regarding the supervision of nonbank SIFIs are not final, they are anticipated to require, among other
items, enhanced capital and liquidity levels, compliance with the comprehensive capital analysis and review regulations
(CCAR), compliance with counterparty credit exposure limits and the development of a resolution plan for submission to
regulators.

Industry The level of industry assistance is None and the trend is Steady
Assistance
The Invoice Factoring industry does not receive government assistance.
However, there are several organizations that provide research and education outreach for the broader asset-based
lending and factoring services market. For instance, the Commercial Finance Association (CFA) is a US-based international
trade association whose mission is to spread inter- and intra-industry ideas and opportunities as well as current information
on legislation and court decisions relating to asset-based financial services. The CFA also endeavors to improve general
information on the function and significance of the industry and to promote the sound development of asset-based financial
services. Some indirect assistance was provided to industry employees in 2020 and 2021 through the Payment Protection
Program in response to the COVID-19 (coronavirus) pandemic.

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Key Statistics
Industry Data
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Access to
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Credit ($b)
2013 5,464 2,063 766 405 5,180 N/A N/A 358 N/A 8,445
2014 4,739 1,956 771 390 4,674 N/A N/A 340 N/A 8,727
2015 4,384 1,929 784 388 4,857 N/A N/A 351 N/A 9,314
2016 4,093 1,746 802 401 4,972 N/A N/A 375 N/A 9,937
2017 3,848 1,702 822 378 5,311 N/A N/A 412 N/A 10,157
2018 4,026 1,826 826 389 5,383 N/A N/A 437 N/A 10,378
2019 4,250 1,902 836 390 5,545 N/A N/A 474 N/A 10,715
2020 4,098 1,819 828 386 5,425 N/A N/A 466 N/A 11,291
2021 3,927 1,725 820 382 5,287 N/A N/A 457 N/A 10,831
2022 3,863 1,687 819 382 5,254 N/A N/A 456 N/A 10,568
2023 3,778 1,638 814 380 5,191 N/A N/A 453 N/A 10,791
2024 3,729 1,610 811 378 5,154 N/A N/A 451 N/A 11,065
2025 3,688 1,588 807 377 5,110 N/A N/A 449 N/A 11,369
2026 3,662 1,576 803 375 5,076 N/A N/A 447 N/A 11,692
2027 3,607 1,550 795 371 5,008 N/A N/A 441 N/A 12,028

Annual Change
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Access to
Year (%) (%) (%) (%) (%) (%) (%) (%) (%) Credit (%)
2013 -13.3 -12.8 -3.53 -7.12 -1.39 N/A N/A -7.64 N/A 1.54
2014 -13.3 -5.16 0.65 -3.71 -9.77 N/A N/A -4.98 N/A 3.33
2015 -7.51 -1.40 1.68 -0.52 3.91 N/A N/A 3.14 N/A 6.73
2016 -6.63 -9.49 2.29 3.35 2.36 N/A N/A 6.83 N/A 6.68
2017 -5.99 -2.56 2.49 -5.74 6.81 N/A N/A 9.97 N/A 2.21
2018 4.61 7.32 0.48 2.91 1.35 N/A N/A 6.03 N/A 2.16
2019 5.56 4.16 1.21 0.25 3.00 N/A N/A 8.44 N/A 3.24
2020 -3.57 -4.39 -0.96 -1.03 -2.17 N/A N/A -1.71 N/A 5.37
2021 -4.18 -5.14 -0.97 -1.04 -2.55 N/A N/A -1.98 N/A -4.07
2022 -1.63 -2.25 -0.13 0.00 -0.63 N/A N/A -0.20 N/A -2.44
2023 -2.23 -2.90 -0.62 -0.53 -1.20 N/A N/A -0.73 N/A 2.11
2024 -1.29 -1.71 -0.37 -0.53 -0.72 N/A N/A -0.34 N/A 2.54
2025 -1.10 -1.34 -0.50 -0.27 -0.86 N/A N/A -0.54 N/A 2.74
2026 -0.70 -0.77 -0.50 -0.54 -0.67 N/A N/A -0.45 N/A 2.84
2027 -1.52 -1.64 -1.00 -1.07 -1.34 N/A N/A -1.21 N/A 2.86

Key Ratios
Imports/ Exports/ Revenue per Wages/ Employees per
IVA/Revenue Demand Revenue Employee Revenue estab.
Year (%) (%) (%) ($'000) (%) (Units) Average Wage ($)
2013 37.8 N/A N/A 1,055 6.55 6.76 69,112
2014 41.3 N/A N/A 1,014 7.18 6.06 72,786
2015 44.0 N/A N/A 903 8.01 6.20 72,246
2016 42.7 N/A N/A 823 9.16 6.20 75,402
2017 44.2 N/A N/A 725 10.7 6.46 77,631
2018 45.4 N/A N/A 748 10.9 6.52 81,219
2019 44.8 N/A N/A 766 11.2 6.63 85,500
2020 44.4 N/A N/A 755 11.4 6.55 85,899
2021 43.9 N/A N/A 743 11.6 6.45 86,401
2022 43.7 N/A N/A 735 11.8 6.42 86,772
2023 43.4 N/A N/A 728 12.0 6.38 87,189
2024 43.2 N/A N/A 724 12.1 6.36 87,524
2025 43.1 N/A N/A 722 12.2 6.33 87,808
2026 43.0 N/A N/A 722 12.2 6.32 88,002
2027 43.0 N/A N/A 720 12.2 6.30 88,119

Figures are inflation adjusted to 2022

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Additional Resources
Additional International Factoring Association
Resources http://www.factoring.org

American Factoring Association

http://www.americanfactoring.org

National Factoring Association

http://www.nationalfactoringassociation.com

US Census Bureau
http://www.census.gov

Industry Jargon FACTORING

A financing arrangement in which a business sells its accounts receivable at a discount.

SALES LEDGER
A detailed breakdown of a company's sales, presented in date sequence.

WORKING CAPITAL
Calculated as current assets minus current liabilities, it is primarily a measure of a company's short-term financial
health.

Glossary BARRIERS TO ENTRY

High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of
capital for every $1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld s reports are made using
the US Bureau of Economic Analysis implicit GDP price deflator.

DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived
by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers
and executives within the industry.

ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.

ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.

EXPORTS
Total value of industry goods and services sold by US companies to customers abroad.

IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less

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than 40%.

INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA)

The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand:
low is less than 5%, medium is 5% to 35%, and high is more than 35%.

LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.

NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-
employed individuals.

PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.

REGIONS
West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ

VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.

WAGES
The gross total wages and salaries of all employees in the industry.

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