Despite a slight slowdown in activity in recent months, factoring remains widely used by companies looking to unlock immediate liquidity. To do so, businesses transfer the management of their receivables to a factor, which can also take over a range of administrative and collection-related tasks. The challenge, however, lies in selecting the right solution from an increasingly broad and diversified market offering. Depending on their size – from large corporates to SMEs – and their geographical footprint – domestic or international – companies will naturally prioritize different criteria. From fully customized structures to standardized digital solutions, with either dedicated relationship teams or fully online servicing models, virtually every configuration now exists. The key is understanding which elements matter most before making a decision.
More than 32,500 companies used factoring solutions in France in 2023, according to the French Financial Companies Association (ASF), representing a slight decline of 1.4% compared to the previous year. In practice, these companies delegated part of their receivables management, cash financing, and collections activities to an independent third party – known as a “factor” – allowing them to focus on their core business. The market today includes a wide range of providers. Traditional factors – banks, bank subsidiaries, specialist finance companies, or independent firms – have been active in France since the 1960s. More recently, a new generation of digital-only factors has emerged.
“Traditional factors often offer more competitive pricing, but less flexibility and customization.”
For Antoine de Chabot, Head of Financial Services and Investment at ASF, however, the distinction between traditional and digital players should not be overstated. “Innovation has always been part of the factoring industry’s DNA,” he notes. “The sector began digitizing processes as early as the 1990s.” Marc Balaguer, Sales Director at BNP Paribas Factor, shares this view while acknowledging the positive impact of fintech entrants: “They have pushed the entire market to accelerate digitalization, from contract execution to day-to-day operational processes. That competitive pressure has driven further innovation.”
Cost Versus Flexibility
Price naturally remains one of the most important criteria when selecting a factor. Raphaël Kakon, CEO of Dimpl, whose receivables financing solution launched in early 2023, openly acknowledges that fintech solutions may sometimes be more expensive than traditional structures. “Our offering can cost more than commitment-based factoring facilities because it is fully customized, invoice-by-invoice and on demand,” he explains.
This reflects a broader market dynamic: traditional factors generally provide lower-cost financing, while fintech solutions focus on flexibility, speed, and operational simplicity. Most factoring fintechs therefore concentrate on SMEs and small businesses rather than large corporates, which require more standardized and large-scale financing structures. Traditional factors, by contrast, emphasize their ability to support companies of all sizes – from small businesses to multinational groups.
Human Support Still Matters
All factoring providers agree on one point: pricing alone should never drive the decision. “Companies need to strike the right balance between the contractual terms and the quality of service,” says Gladys Teale-Moulines, Head of Client Relations at Crédit Agricole Leasing & Factoring. Traditional providers often differentiate themselves through local relationship management and physical client coverage. “Every client has a dedicated relationship manager,” explains Marc Balaguer, highlighting the importance of trust and proximity. Crédit Agricole Leasing & Factoring follows a similar model. “Our teams know their clients well and remain close to their day-to-day realities. We aim to adapt our solutions locally or across multiple geographies depending on client needs,” says Gladys Teale-Moulines.
“The absence of physical presence is not necessarily a barrier to delivering a strong client experience.”
Digital factors compensate through highly intuitive interfaces designed to minimize friction and operational complexity. At Dimpl, for example, clients do not need to manually upload invoices. Instead, they simply copy the platform into their invoice emails, dramatically simplifying onboarding and execution. “We place enormous importance on responsiveness,” adds Raphaël Kakon, acknowledging that businesses need rapid answers whenever operational questions arise.
Factoring Activity Continued to Decline in Early 2024
Beyond pricing and servicing, companies must also evaluate a factor’s financial strength, scalability, and international capabilities. Each business therefore needs to prioritize its own requirements before comparing providers.
Factoring remains the leading short-term financing solution for companies in France, ahead of overdraft facilities, even though market activity has slowed since late 2023. Between January and March 2024, French factoring activity declined again by 2.6%, reaching €100.9 billion according to ASF figures – marking the third consecutive quarterly decline.
This slowdown follows nearly a decade of double-digit annual growth (excluding the Covid period). The market is currently impacted by higher interest rates, macroeconomic uncertainty, political instability, and more cautious corporate behavior. Still, Marc Balaguer remains confident: “Companies will always have significant working capital requirements. As a result, demand for factoring solutions will remain strong.”
Factoring solutions designed for SMEs
In May, Factofrance launched a simplified financing solution dedicated to SMEs and small businesses. The product is an evolution of its existing FactoFlex offering and was specifically redesigned to better reflect the operational realities of smaller companies. “The objective is to provide a more flexible and practical financing solution adapted to SME needs,” the company stated.
The offer includes two major innovations:
- Financing of up to 100% of assigned invoices, without the traditional reserve holdback
- A single, transparent fee structure
These features complement the standard services of a traditional factoring agreement, including bad debt protection, 100% indemnification in case of customer insolvency, collections management, and digital servicing tools. The solution also supports export invoices and can be subscribed without volume or duration commitments.
Factofrance emphasized that the product was developed in consultation with SME owners and accountants to simplify accounting entries and reduce administrative complexity. The company is not alone in targeting this market segment. BNP Paribas Factor, Crédit Agricole Leasing & Factoring, and various fintech providers have also developed SME-focused solutions. “SMEs have very specific operational needs, which is why simplicity and transparency are critical,” says Raphaël Kakon of Dimpl. “The absence of long-term commitments is also extremely important for them.” Given that SMEs represent more than 99.8% of all French companies according to INSEE, it is unsurprising that factors increasingly see them as a major growth opportunity.
The Advantages of international factoring
International factoring operates much like domestic factoring but is designed for companies headquartered in France or the European Union that operate foreign subsidiaries or export internationally. “For these businesses, factoring is a way to finance international activity while securing receivables through bad debt protection,” explains Marc Balaguer of BNP Paribas Factor.
Antoine de Chabot adds that factors can also provide highly specialized support, including:
- Pre-contract credit intelligence
- Assistance with contract drafting and execution
- Country-by-country receivables monitoring
Factors can therefore assess the solvency of foreign buyers – information companies may struggle to obtain independently – while also navigating local payment practices, currencies, and collection customs. When collections become necessary, factors also overcome language barriers and understand whether local business culture favors written or verbal reminders.
That said, international factoring activity among French providers slowed in 2023. International volumes declined by 1.1%, while domestic factoring activity increased by 2.3%. This marks a significant shift from previous years, when international factoring had been the primary growth engine of the industry.
Source: Le Nouvel Économiste article