In 2008, the total world volume for factoring increased by 2
per cent, compared to almost 15 per cent in 2007. We
can see that Europe has shown an upward trend till 2007, and then a downward
trend. If we see the trend of Asia, it is stagnant in initial years i.e.
till 2006 and then has shown a little upward trend till 2007. After 2007, a
notable increase is seen and thus factoring volume crossed 200 billion. Africa
and Australia showed a similar and a stagnant trend. The factoring volume of
America is very similar to Asia, but after 2007, Americas factoring volume is
seen stagnant only The overall results illustrate that exporters and importers,
around the world, are becoming more and more familiar with the advantages to be
derived from a factoring arrangement: working capital, credit risk protection
and collection service for the exporter.
From the above diagram, it is seen that till 2007, UK has shown an upward
trend, but after 2007, factoring volume decreased significantly. USA has shown a stagnant growth in factoring volumes. India has shown a notable increase in
factoring volumes since 2005. In 2007 factoring volumes were Euro 5.20 billion
in comparison to Euro 1.99 billion in 2005. So we can say that factoring is
moving upward in India, and soon factoring will spread its wings across the
length and breadth of the country.
It is quite implied now that factoring is a very
easy and fast method. Still, its implementation is not so good. There are
certain hiccups that have come up in the way of releasing the full potential of
factoring in India. One of the main reasons for it is the legal framework of India. Generally factoring companies need legal protection as all advances are
uncollateralized, protection for the same is not provided.
Still there is only one direction in which
factoring can go in India: upwards. As the awareness level about the benefits
of factoring increases, factoring will spread its wings across the length and
breadth of the country.
Source: Hindu business line, Factor Chain International
