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A Forecast of the Global Receivables Finance Industry
A closer look at what the next few years hold for global receivables finance and how SMBs will continue to shape the industry.
Over the last few years, the receivables finance industry has been rapidly growing. Based on a recent report by Allied Market Research, the global receivables finance market is expected to reach $9.3 billion by 2027, growing at a CAGR of 4.8% from 2020 to 2027. In this article, we’ll take a closer look at what the next few years hold for global receivables finance and how small and medium-sized businesses (SMBs) will continue to shape the industry.
One of the main drivers in recent industry expansion is the increasing demand for working capital among small businesses. According to the World Economic Forum, SMBs represent 90% of all businesses in the world, and these businesses are responsible for 70% of the gross domestic product worldwide. These businesses, though, often face hurdles when seeking access to traditional financing options, such as bank loans and lines of credit. Due to this challenge, many companies seek alternative financing options, like receivables finance. In this current shrinking economy, this option will likely prove to be a viable finance option that allows SMBs to manage their cash flows and grow their businesses, even in challenging times.
The development of technology is also expected to encourage industry expansion in upcoming years. According to a report by Deloitte, the adoption of technology in the receivables finance industry is expected to grow by 22% annually over the next five years. These recent developments have made it possible for businesses to access funding in a fast and cost-efficient manner and have vitalized industry growth.
The COVID-19 pandemic has also pushed the receivables finance industry to grow and evolve. The pandemic has made it increasingly difficult to manage working capital due to disrupted supply chains and cash flows. Many businesses, as a result, have been turning to receivables finance as a remedy for working capital constraints. This has helped them meet their own financial obligations without interrupting commitments to customers.
In conclusion, the future of the receivables finance industry is bright. In 2022, the global alternative financing industry was valued at 10.82 billion USD, and according to a report by Grand View Research, industry experts are predicting that the industry will be valued at 45.72 billion USD by 2030. As SMBs continue to drive demand for working capital, the adoption of technology makes obtaining funds faster and more cost-efficient, and companies continue to adapt in a post-pandemic society, now is a great time for businesses to explore the benefits of receivables finance.