Receivables finance turns issued invoices into cash, a market FCI puts at EUR 4.04 trillion a year
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Ossiano Guides · Getting paid
A seller sells or assigns its invoices to a finance provider, receives most of their value after verification, and receives the balance, less fees and discount, when the buyer pays.
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01 · What it is
Receivables finance is the sale or assignment of invoices a seller has already issued
The Global Supply Chain Finance Forum (GSCFF) defines as a form of in which sellers sell their invoices at a discount to a finance provider, on its factoring technique page. The GSCFF lists as a synonym of , the sale of one or more receivables to a finance provider at a discount, on its receivables discounting page.
International law sets a functional test. Under the UNIDROIT Convention on International Factoring of 1988, a factoring contract requires the factor to perform at least two of four functions: finance, ledgering, collection and default protection.
The vocabulary is shared across the industry. The forum of BAFT, EBA, FCI, ICC and ITFA published its Standard Definitions for Techniques of Supply Chain Finance in 2016. Each structure has its own card in our instrument library: factoring and invoice discounting.
02 · Market size
World factoring volume passed EUR 4 trillion in 2025
FCI, the global factoring association, puts world factoring volume at EUR 4.04 trillion in 2025 in its Annual Review 2026, and its homepage reports the global factoring market above EUR 4 trillion.
For 2023, FCI reported EUR 3,781 billion, up 3.3 percent from EUR 3,659 billion in 2022. Europe accounted for EUR 2,555 billion, or 68 percent, and 20-year compound growth stood at 8.3 percent. The US International Trade Administration's Trade Finance Guide cites a 2020 worldwide volume of USD 3.35 trillion, from FCI data.
Figure 1
World factoring volume
Each card shows one reported year. Figures are FCI's, as published.
Sources: FCI, Annual Review 2026 (2025 volume); FCI, 2023 preliminary world factoring statistics, April 22, 2024 (2022 and 2023 volumes).
03 · The flow
The finance provider pays against a verified invoice and settles the balance when the buyer pays
The seller delivers, invoices and sends a copy of the invoice, or the invoice dataset, to the finance provider, according to the GSCFF's factoring and receivables discounting pages. After verification the provider advances a share of the invoice value, the , usually around 80% in factoring; in invoice discounting it pays the discounted value of the receivable.
On the due date the buyer pays the finance provider in factoring, or pays into a in the seller's name that only the finance provider may withdraw from in invoice discounting. The provider then releases the , the remaining value, less the agreed fees and .
Figure 2 · Interactive
Follow an invoice from issue to payment
Tap a structure to see who acts at each step. The last step shows how the balance is settled.
Sources: Global Supply Chain Finance Forum, Standard Definitions, factoring and receivables discounting pages, revised October 31, 2024; US International Trade Administration, Trade Finance Guide, July 2022.
Court records show the same structure in practice. In Close Invoice Finance Ltd v Watts & Anor [2009] EWCA Civ 1182, the Court of Appeal describes a Discounting Agreement dated August 23, 2005, under which Close was to purchase the receivables at face value and pre-pay 80 percent of the value of each receivable.
Figure 3 · Try it
What an advance on one invoice costs
Move the sliders to change the invoice, the advance and the days until the buyer pays.
Advance rate
Days until the buyer pays
Advance paid now
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Balance paid when the buyer pays
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Total cost
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How it works: the advance equals the invoice times the advance rate; the service fee equals the invoice times the fee percent; the discount charge equals the advance times the annual rate times the days, divided by 360; the balance equals the invoice minus the advance, the fee and the discount charge.
Our Research Desk used simple interest on a 360-day year: advance x annual rate x days / 360, plus a service fee on the invoice. The rates and fees shown are for illustration and are not Ossiano pricing.
This calculator explains the concept only. Advance rates, fees and rates vary by buyer, country, tenor and provider.
For how fees and rates are built up across trade finance, see our guide to how trade finance is priced.
04 · Recourse
Recourse terms decide who carries the buyer's credit risk
Where credit cover is in place, factoring is non-recourse; without it, factoring is with recourse, FCI explains. In , the finance provider normally pays 100% of credit-covered receivables if the buyer defaults, according to the GSCFF. Credit cover of this kind is the subject of our guide to trade credit insurance.
Receivables discounting can be , but or limited recourse is often maintained, the GSCFF notes. Whether factoring comes with or without recourse depends on credit insurance, jurisdiction and market practice, the GSCFF adds.
05 · Disclosure and control
Factoring usually notifies the buyer; invoice discounting can stay confidential
In factoring, the invoice bears a and the buyer is notified, and the finance provider usually manages the debtor portfolio and collects the receivables, according to the GSCFF.
Invoice discounting may be disclosed or undisclosed to the buyer. It runs under a ; the seller keeps sales ledger management and meets the finance provider's credit control requirements, and at maturity the buyer pays into an account in the seller's name from which only the finance provider may withdraw, as the GSCFF sets out. Our guide to factoring vs invoice discounting compares the two side by side.
The GSCFF lists the variations a finance team will meet: confidential or disclosed, domestic or international, recourse or non-recourse, and whole turnover or selective.
06 · Cross-border
Export factoring adds a correspondent import factor in the buyer's country
In the set out in the ITA Trade Finance Guide, the export factor selects an through a correspondent network, and the import factor checks the buyer's credit. The import factor then handles local collection and payment. FCI describes its GRIF rules as the framework for cross-border factoring under its two-factor legal framework.
The ITA states that the advance rate is generally limited to 80 percent of invoices factored, and that factoring generally fits foreign receivables on terms of up to 180 days. In international factoring the exporter receives payment up front from the factor by way of a discount against the invoice, FCI explains. Most of these sales are on , covered in our guide to open account trade.
07 · Accounting reference
Official standards and company filings are the reference points for reporting
For IFRS reporters, the reference standard is IFRS 9 Financial Instruments, effective for annual periods beginning on or after January 1, 2018. The IFRS Foundation notes that IFRS 9 carried forward the IAS 39 derecognition requirements unchanged.
US filers describe their own programs in their reports. The Manitowoc Company's Form 10-Q for the quarter ended June 30, 2022 carries a note on accounts receivable factoring that discloses two non-US receivable financing programs of up to EUR 55.0 million and one US program of up to USD 27.0 million.
This section points to official references and one company's own disclosure. It is a reference summary only and does not assess how any program is reported.
08 · Ossiano view
Receivables are a mainstream, standardized funding asset
OBSERVATION 01
Scale that finance teams can rely on
FCI reports world factoring volume of EUR 4.04 trillion in 2025, above the EUR 3,781 billion it reported for 2023. Receivables finance is a deep, established market.
OBSERVATION 02
One vocabulary across providers
The 2016 Standard Definitions, backed by BAFT, EBA, FCI, ICC and ITFA, name the variations a CFO will meet: confidential or disclosed, domestic or international, recourse or non-recourse, whole turnover or selective.
OBSERVATION 03
Cross-border collection built in
In the two-factor model a correspondent import factor checks the buyer and collects locally, so export receivables can be financed through a local presence in the buyer's market.
Summary
Receivables finance turns issued invoices into cash before the buyer pays
A finance provider verifies the invoice and advances a share of its value, usually around 80% in factoring. When the buyer pays, the provider releases the balance less fees and discount. In factoring the provider usually runs collections; in invoice discounting the seller keeps the sales ledger. Recourse terms decide who carries the buyer's credit risk.
FCI puts world factoring volume at EUR 4.04 trillion in 2025, and cross-border receivables are financed through a two-factor model with an import factor in the buyer's country.
Related guides: Factoring vs invoice discounting; Pre-shipment vs post-shipment finance; Trade credit insurance; Payables finance; Open account trade; The cash conversion cycle; Trade finance vs supply chain finance.
Instrument cards: Factoring; Invoice discounting; Forfaiting; Trade credit insurance; Open account; Asset-based revolving facility. Every term on this page is defined in the Trade Finance Glossary.
For questions on how receivables finance applies to existing or planned trade flows, contact the Ossiano Research Desk.
Sources
- FCI, FCI Annual Review 2026, 2026. Supports: world factoring volume of EUR 4.04 trillion in 2025.
- Global Supply Chain Finance Forum, Factoring, technique page, October 31, 2024. Supports: factoring definition; advance of usually around 80% after verification; settlement of the balance less fees and discount; notice of assignment and buyer notification; debtor management and collection; non-recourse cover of normally 100%; recourse depending on credit insurance, jurisdiction and market practice; the four variation pairs.
- US International Trade Administration, US Department of Commerce, Trade Finance Guide: A Quick Reference for US Exporters (2022 edition), July 2022. Supports: two-factor flow and the import factor's role; advance rate generally limited to 80 percent and terms of up to 180 days (page 23); 2020 worldwide factoring volume of USD 3.35 trillion, from FCI data.
- FCI, FCI 2023 preliminary world factoring statistics, April 22, 2024. Supports: EUR 3,781 billion in 2023 and EUR 3,659 billion in 2022; Europe EUR 2,555 billion, 68 percent; 20-year compound growth of 8.3 percent.
- Global Supply Chain Finance Forum, Receivables Discounting, technique page, October 31, 2024. Supports: receivables discounting definition and invoice discounting as a synonym; the seven-step flow under a Receivables Purchase Agreement; ledger and credit control; controlled collection account; recourse often maintained; disclosed or undisclosed form.
- FCI, What is factoring?, undated. Supports: non-recourse with credit cover, recourse without it.
- UNIDROIT, UNIDROIT Convention on International Factoring (Ottawa, May 28, 1988), May 28, 1988. Supports: a factoring contract requires at least two of four functions, Article 1(2).
- Global Supply Chain Finance Forum, Standard Definitions for Techniques of Supply Chain Finance, 2016. Supports: publisher and year; BAFT, EBA, FCI, ICC and ITFA.
- FCI, FCI homepage, September 28, 2026. Supports: global factoring market above EUR 4 trillion in 2025.
- FCI, Contract and rules, the key elements for correct factoring and supply chain finance transactions, August 2, 2022. Supports: GRIF as the framework for cross-border factoring under FCI's two-factor legal framework.
- IFRS Foundation, IFRS 9 Financial Instruments, undated. Supports: effective date of January 1, 2018; derecognition requirements carried forward from IAS 39.
- US Securities and Exchange Commission (EDGAR), The Manitowoc Company, Inc., Form 10-Q for the quarter ended June 30, 2022, note: Accounts Receivable Factoring, August 5, 2022. Supports: disclosed program sizes of up to EUR 55.0 million (two non-US programs) and USD 27.0 million (one US program).
- Alternative Reference Rates Committee, SOFR "In Arrears" Conventions for Syndicated Business Loans, July 22, 2020. Supports: Actual/360 as the standard US money market day count, used in Figure 3.
- Board of Governors of the Federal Reserve System, Selected Interest Rates (Daily), H.15, September 29, 2026. Supports: money market rates annualized on a 360-day year, used in Figure 3.
- FCI, International Factoring, undated. Supports: up-front payment to the exporter by way of a discount against the invoice.
- Court of Appeal (Civil Division), England and Wales, Close Invoice Finance Ltd v Watts & Anor [2009] EWCA Civ 1182, September 2, 2009. Supports: Discounting Agreement dated August 23, 2005; purchase at face value; pre-payment of 80 percent of each receivable (paragraph 5).
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