Trends and outlook for invoice factoring in Mexico
The factoring industry in Mexico has experienced notable and significant growth over recent years. As micro, small, and medium-sized enterprises learn about and experience the benefits of this financial tool, the trends and outlook for the sector keep evolving.
Invoice factoring
Invoice factoring has established itself as an essential tool for micro, small, and medium-sized enterprises (MSMEs) in Mexico, making it possible to transform accounts receivable into immediate liquidity. In an environment where access to traditional financing remains a challenge for many companies, factoring is an effective solution to improve cash flow and ensure the continued operation of businesses.
According to the National Business Financing Survey (ENAFIN) 2021, only 2% of Mexican companies used invoice factoring in 2020 — a percentage similar to that observed in 2017. However, the growth potential is high, since 97% of companies have never used this tool, often due to lack of awareness.
Trends in Invoice Factoring in Mexico
According to the Mexican Association of Factoring Financing and Similar Activities (AMEFAC), invoice factoring in Mexico has grown at an average annual rate of 15% over the past five years. This trend reflects the growing confidence of Mexican companies in this financial tool, especially in times of economic uncertainty.
In 2023, factoring transaction volume in Mexico reached 500 billion pesos, representing a 20% increase over the previous year. This growth has been especially evident in sectors such as manufacturing, technology, and logistics.
Factoring Growth in Strategic Sectors
ENAFIN 2021 reveals that factoring has found an important niche in sectors such as manufacturing and logistics, where access to capital is essential to sustain operations. A chart in the report shows how medium and large companies lead the adoption of factoring, although microenterprises still show low penetration.
See Panel A (Left) of chart 4.5 in the ENAFIN 2021 report
Technology and Digitalization in factoring
The use of digital platforms has made it easier for companies to access factoring faster and more efficiently. In fact, according to the report, 61% of companies already use online banking and 34% use mobile banking, which could drive greater adoption of digital factoring, since companies are already familiar with digital tools for money management.
See Panel B (Right) of chart 4.4 in the ENAFIN 2021 report
On the other hand, fintech companies like KredFeed have simplified factoring application and approval through digital platforms. Today, SMEs can access liquidity in less than 72 hours, without excessive paperwork or complicated procedures.
In addition, process automation, such as risk assessment and accounts receivable management, has made factoring more accessible and efficient than ever. The use of digital platforms for factoring is expected to grow by 30% annually over the next three years, according to a Statista study.
Barriers to Factoring Adoption
Lack of awareness remains a major barrier.
28% of companies that don’t use factoring said they don’t know how it works
11% mentioned not knowing where to apply for it.
This lack of information is especially notable in micro and small enterprises, which highlights the need for financial education and awareness of the benefits of factoring.
See Panel A (Left) of chart 4.6 in the ENAFIN 2021 report
Outlook for factoring in Mexico
The future of factoring in Mexico is promising. According to the ENAFIN 2021, companies that have used invoice factoring mostly use it to finance daily operations (93%) and pay debts (58%). This reflects factoring’s ability to maintain companies’ liquidity and financial stability, especially in times of economic uncertainty.
In addition, with the growing digitalization and the rise of fintech, factoring is expected to become a comprehensive tool for cash flow management, integrated with other financial services such as accounts payable management and credit solutions.
See Panel B (Right) of chart 4.5 in the ENAFIN 2021 report
Tangible benefits of invoice factoring for SMEs
Improved cash flow: By turning accounts receivable into immediate cash.
Reduced risk of non-payment: Factoring companies assume the credit risk of customers.
Supports business growth: Lets you finance projects and cover operating expenses without taking on debt.
Conclusion
Invoice factoring in Mexico is an invaluable opportunity for SMEs looking to maintain healthy cash flow and boost their growth. With the combination of technology and sector-specific specialization, KredFeed positions itself as a strategic ally for those companies looking to maximize their potential and stay competitive in the market.
If your company needs immediate liquidity, we invite you to learn more about our solutions at: KredFeed
