- 25 Jan
Factoring Market Saturation?
I have just been reading an article written by an industry broker about the factoring and invoice discounting markets reaching the point of "saturation".
Wikipedia defines "market saturation" as the point at which a product has become diffused (distributed) within a market and it gives the example of refrigerators being present in 97% of homes - a saturated market.
According to the September 2009 statistics from the ABFA (the industry body for the factoring and invoice discounting industry) their membership (the main factors and discounters within the UK) report that there are only 42,983 UK businesses using factoring & invoice discounting.
According to the Federation of Small Businesses there are at least 4,700,000 small businesses in the UK, and note that those are "small businesses" only which is likely to be some way south of the total number of UK businesses (you would not believe how hard it is to track down a reliable total for the number of businesses in the UK!).
So just using those figures above, the take up of invoice finance is just over 0.9% of the business population! It is hardly at the point of market saturation, even if we allowed for a significant proportion of the total number of businesses not being eligible for these types of products.
What is true is that there are many invoice finance providers fighting over such a small number of existing product users when the real prize is in increasing the level of market saturation by recruiting new users to this set of products.