Times have been a little tough for the factoring industry since the beginning of 2020. But, future factoring trends appear to be moving upwards. As banks tighten up their lending practices, more businesses are likely to turn to factoring to help with their temporary cash flow problems. Here are some of the trends to look out for.
The Financial World Has Changed—and So Has Factoring
The world will never be the same after 2020. Consumer spending habits and priorities have shifted dramatically and this has forced businesses to adjust their operational practices. Even though the overall economic trend after the COVID pandemic tends towards austerity, this is not necessarily the case for factoring. The freight factoring sector has seen a considerable upward boost since the beginning of 2021. This is due to logistics companies adjusting to changes in the supply chain. In other sectors, many businesses need a little temporary financial help. They are looking to reduce expenses and adapt to the post-pandemic world.
Banks are More Reluctant to Lend
Banks are more reluctant than ever to finance fast-growing small and medium-sized businesses due to the strain that rapid growth can put on a company’s cash flow. Fast growth today does not necessarily equate to outstanding performance in the future. Banks fear that they may lend the funds businesses need during a growth spurt, only to find borrowers short of cash and on a downward trend when the time comes to repay. As a result, small businesses can rely even less on banks than they did in the past. Factoring companies are here to fill that gap.
Future of Factoring Trending Upwards
Factoring companies are set to play a larger role in aiding the growth of small and medium-sized companies during these uncertain times. As we have always been, we are uniquely positioned to look past the numbers, set aside customers’ financial history, and focus on helping businesses grow. Our approach is more critical than ever as the world seeks to restore normalcy after the past two turbulent years.
Kore Capital is an experienced and trusted financial services provider that can offer you all the benefits of factoring and asset-based lending for your business’s cash flow. Contact us for more information.