After several years of strong growth, the factoring market is adapting to a weaker economic environment and rising competition. Factors are increasingly targeting SMEs and small businesses, which had previously been reluctant to use a financing solution often perceived as too complex. New offerings are emerging – simpler, more flexible, and sometimes tailored to specific industries. This creates a real opportunity for SMEs, as factoring is often less expensive than an overdraft facility while also helping companies secure their receivables in an environment marked by rising business failures.
The factoring market has just gone through two unusually subdued years, with only modest growth in 2023 and 2024 – a sharp contrast for a sector historically accustomed to double-digit expansion. As France’s leading short-term corporate financing solution, factoring enables businesses to sell invoices to a specialized finance provider in exchange for immediate liquidity. Over the past decade, the market has expanded significantly, growing from nearly €200 billion of financed receivables in 2013 to €432 billion in 2023. Today, factoring serves everyone from CAC 40 companies to local independent businesses financing B2B receivables.
“While some segments remained dynamic – particularly international factoring – competition is intensifying in a market still dominated by major banking networks.”
“If certain activities remained resilient, particularly international factoring, competition has intensified in a landscape dominated by large banking groups,” notes Marc Bonnemains, Deputy CEO of BPCE Factor.
Against a backdrop of 66,000 corporate insolvencies, factors are launching new products designed both to retain existing clients and attract new ones. These solutions aim to help companies strengthen liquidity and unlock additional financing lines quickly, especially as factoring often proves more cost-effective than bank overdrafts. Factors are therefore seeking new growth drivers and targeting SMEs and small businesses that have traditionally remained outside the factoring ecosystem due to their size or industry profile.
Simplified Factoring Solutions for Small Businesses
While mid-sized companies are generally well equipped with factoring facilities, small businesses still tend to rely on their local banking relationships. Smaller companies lacking dedicated finance functions often struggle with factoring, which “is still perceived as a complex product, even by some accountants,” explains Olivier Lène, Deputy Head of Large Accounts at Factofrance.
To address this issue, Factofrance recently launched a simplified factoring offer specifically designed for SMEs and micro-businesses. The objective is to streamline implementation, simplify accounting treatment, and finance up to 100% of receivables without the traditional 10% retention reserve.
“Another financing solution particularly suited to small businesses is the emergence of selective invoice financing.”
Selective invoice financing is also gradually gaining traction. Société Générale Factoring, for example, now allows businesses to finance only part of the invoices issued to a specific customer.
“We have removed the requirement that all invoices from a given buyer be assigned to us,” explains Philippe Pougeard, Deputy CEO of Société Générale Factoring. “Companies can now finance any invoice individually, depending on their cash requirements.”
According to him, the rollout of e-invoicing and certified digital invoicing platforms (PDPs) should further accelerate adoption of factoring solutions. BPCE Factor has also introduced a new digital solution called Flash Facture, targeting SMEs and small businesses with occasional – rather than recurring – financing needs. “When a small company wins a major contract for the first time, payment may only arrive 60 to 90 days later. But cash remains the lifeblood of any business,” says Marc Bonnemains. BPCE Factor has also partnered with Banque de l’Orme to launch a factoring product dedicated to companies under restructuring or safeguard proceedings.
New Sectors and “ESG Discounts”
Some factors are also expanding into industries historically considered difficult to finance through factoring, including real estate, construction, and automotive trading. These sectors require deeper expertise and the ability to manage non-final invoices or progress billings. “In construction, for example, interim payment certificates create very specific operational risks,” explains Marc Balaguer, Sales Director at BNP Paribas Factor, which opened factoring to construction companies more than twenty years ago and now extends these services to SMEs as well.
Another emerging trend concerns preferential pricing mechanisms linked to ESG performance – effectively an “ESG discount” on factoring costs. “These offers target companies already measuring their ESG performance through independent third-party verification. Depending on results, pricing adjustments can apply in the form of bonuses or penalties,” explains Christophe Jouan, Large Accounts Consultant at Fibus.
Some banks have even extended these mechanisms to companies that do not yet have formal ESG reporting frameworks in place, particularly SMEs. “In those cases, the factor helps the company define and implement the relevant ESG indicators,” Christophe Jouan adds. Through its subsidiary Factofrance, Crédit Mutuel is currently exploring similar initiatives. “We could imagine having a partner assess the ESG quality of a company’s customer portfolio and relaxing certain factoring criteria if the portfolio achieves a strong ESG rating,” says Olivier Lène. These incentives align with broader banking-sector ESG policies.
3 Questions to… Romain Chaufour, Head of Business Development at Fibus
How does factoring fit into an increasingly complex international environment?
Factoring adapts to virtually every situation – whether supporting growth or helping stabilize a company facing financial pressure. It can be implemented across all or part of a business, both domestically and internationally. French factors are among the most dynamic in Europe and are capable of deploying multi-country financing programs across a wide range of jurisdictions. In today’s more uncertain environment, we are seeing factoring expand throughout Europe, especially in Germany. By converting receivables – often representing nearly two months of sales – into immediately available cash, factoring secures working capital financing. It is an extremely reliable financing tool, often more stable than overdraft facilities or Dailly assignments. In restructuring or amicable proceedings, maintaining an active factoring program often reassures creditors and becomes a sign of financial stability.
How has Fibus innovated by combining advisory and software solutions?
At Fibus, we strongly believe in the digitalization of financing operations. Alongside our historical advisory business, which has existed for 20 years, we acquired a software company six years ago.
We subsequently developed the platform to help finance teams manage their factoring and trade credit insurance programs more efficiently. The solution enables finance departments to reconcile customer account variances, identify untapped financing capacity, and consolidate reporting across entities, contracts, and countries. This digital offering has become a major differentiator in a market that had seen little technological innovation for years. Fibus continues to invest heavily in these tools to address CFOs’ growing need for efficiency, operational optimization, and financing visibility.
What are your priorities for the coming year?
Fibus will continue expanding internationally. We opened an office in Frankfurt at the end of last year to accelerate our development in Germany. One of our core specializations remains supporting sponsor-backed companies. After several slower years in the private equity market, we expect a rebound in deal activity in 2025, particularly among European mid-sized companies owned or acquired by investment funds.
Factoring vs. Securitization: competing financing solutions
A few years ago, factoring programs rarely competed directly with securitization facilities. “Today, this comparison has become commonplace in financing tenders from large corporates, including CAC 40 companies,” says Olivier Lène of Factofrance.
Both solutions ultimately serve the same objective: financing corporate receivables. However, securitization extends beyond trade receivables and can include long-term receivables, consumer loans, credit card balances, and other asset classes. “For many years, these two solutions coexisted without really overlapping,” explains Gaëtan du Halgouët, CEO of Fibus. “But factoring gradually gained market share once factors started handling large-scale international programs around ten years ago.”
The key distinction lies in structure and complexity. Factoring is a bilateral agreement between a company and a factor, whereas securitization requires multiple stakeholders: the originator, arranger, servicer, rating agency, and investors purchasing the issued securities. It also requires setting up a dedicated SPV (Special Purpose Vehicle). As a result, factoring is generally faster to implement and less expensive. However, some companies – particularly those undergoing financial restructuring – may only have access to securitization markets. “In one recent case involving a large French corporate, securitization costs were roughly three times higher than a factoring solution would have been,” notes Gaëtan du Halgouët. That said, for highly rated international groups with diversified receivables portfolios and large invoice volumes, securitization can still prove more attractive. “Securitization is primarily suited to large multinational companies with very significant customer and invoice volumes, where risk diversification is naturally stronger,” concludes Gaëtan du Halgouët.
Source: Le Nouvel Économiste article