Supply Chain Financing Market Trends, Size, Share by 2031
The supply chain financing market size is expected to grow from US$ 6.5 billion in 2023 to US$ 12.5 billion by 2031; it is anticipated to expand at a CAGR of 8.5% from 2023 to 2031. The market growth in the industry is being driven by various factors, including lower financing costs and improved efficiency, globalization and supply chain risk, and the rising need for working capital management.
Supply Chain Financing Market Analysis
Several factors are driving the supply chain finance market. Firstly, there is a growing need for safety and security in supplying activities, which has led to an increased demand for supply chain finance solutions. This need for safety and security is particularly prominent in the current business landscape, where disruptions and uncertainties are common. Secondly, the adoption of supply chain finance by small and medium-sized enterprises (SMEs) in developing countries is contributing to the growth of the market. SMEs are recognizing the benefits of supply chain finance in improving their financial operations and enhancing their competitiveness.
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Supply Chain Financing Market: Strategic Insights
Market Size Value in US$ 6.5 billion in 2023 Market Size Value by US$ 12.5 billion by 2031 Growth rate CAGR of 8.5% from 2023 to 2031 Forecast Period 2023-2031 Base Year 2023
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Supply Chain Financing Market: Strategic Insights
| Market Size Value in | US$ 6.5 billion in 2023 |
| Market Size Value by | US$ 12.5 billion by 2031 |
| Growth rate | CAGR of 8.5% from 2023 to 2031 |
| Forecast Period | 2023-2031 |
| Base Year | 2023 |
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Supply Chain Financing Industry Overview
- Supply chain finance, also known as supplier finance or reverse factoring, is a financial solution that optimizes cash flow and working capital for businesses involved in supply chain activities.
- It involves a set of technology-based processes that connect buyers, suppliers, and financial institutions to lower financing costs, improve cash flow efficiency, and reduce risks. In supply chain finance, the buyer typically has a better credit rating than the seller, allowing them to access capital at a lower cost from a financial provider.
- This advantage enables buyers to negotiate better terms with sellers, such as extended payment schedules. Meanwhile, sellers can receive immediate payment from an intermediary financing body, allowing them to unload their products more quickly. The goal of supply chain finance is to provide short-term credit and optimize working capital for both buyers and sellers. It helps suppliers receive early payment on their invoices, reducing the risk of supply chain disruption and improving financial stability. Buyers benefit from increased working capital and the ability to strengthen relationships with suppliers.
Supply Chain Financing Market Driver
Rise in need for Safety and Security of Supplying Activities to Drive the Supply Chain Financing Market
- Several key factors are driving the supply chain financing market growth. First and foremost, the rise in the need for safety and security is contributing to the expansion of the supply chain financing market growth.
- The demand for supply chain finance is increasing due to market manipulation, which includes factors such as loss of investor confidence, damage to market integrity, fraudulent behavior, and pressure on financial firms to invest in supply chain finance approaches that offer better data collection, monitoring capabilities, and financial security. In the early days of international trade, exporters faced uncertainty about whether importers would pay for their goods.
- In contrast, importers were concerned about making payments without a guarantee of goods being shipped. Supply chain finance has evolved to address these risks by providing faster payments to exporters and assuring importers through letters of credit. To stay ahead of competitors, supply chain finance providers are introducing more solutions to enhance the investor interface experience. This increased focus on safety and security in supply chain activities is anticipated to bring new opportunities for the supply chain financing market forecast.
Supply Chain Financing Market Report Segmentation Analysis
Based on offering, the supply chain financing market is segmented into export and import bills, letters of credit, performance bonds, shipping guarantees, and others. The export and import bills segment is expected to hold a substantial supply chain financing market share in 2023. This can be attributed to the role of banks in facilitating the movement of documents and payments to suppliers. In the context of trade finance, an export bill for collection is a method where an exporter approaches a bank to control the movement of documents and their release. Exporters often face the risk of non-payment from importers, while importers are concerned about making payments without the guarantee of goods being shipped. Supply chain finance, particularly through the use of export bills, addresses these risks by accelerating payments to exporters and assuring importers through letters of credit (LOC). Thus, the increasing need for safety and security in international trade activities is expected to bring new supply chain financing market trends.
Supply Chain Financing Market Analysis by Geography
The scope of the supply chain financing market report is primarily divided into five regions - North America, Europe, Asia Pacific, Middle East & Africa, and South America. North America is experiencing rapid growth and is anticipated to hold a significant supply chain financing market share. The influence of globalization on corporate finances and supply chain risk has intensified, leading to an increased demand for supply chain financing solutions. Additionally, the increase in remote working and social distancing has posed challenges for supply chain finance in capturing data from multiple locations and sources. This has highlighted the importance of robust supply chain financing solutions to mitigate risks and ensure smooth operations.
Supply Chain Financing Market Report Scope
The "Supply Chain Financing Market Analysis" was carried out based on offering, provider, application, and geography. In terms of offering, the market is segmented into export and import bills, letters of credit, performance bonds, shipping guarantees, and others. Based on provider, the market is segmented into banks, trading finance house and others. By application, the market is segmented into domestic and international. Based on geography, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South America.
Supply Chain Financing Market News and Recent Developments
Companies adopt inorganic and organic strategies such as mergers and acquisitions in the supply chain financing market. A few recent key market developments are listed below:
- In August 2023, HSBC made a strategic investment of US$ 35 million in Tradeshift, a supply chain finance outfit, as part of their plans to establish a new joint venture company. The joint venture will focus on the development of embedded financial services. This investment is part of a larger funding round that is expected to raise a minimum of $70 million from HSBC and other investors. The collaboration between HSBC and Tradeshift aims to create a range of digital solutions that will be integrated into Tradeshift's platform and other platforms. These solutions will include payment and fintech services embedded into trade, e-commerce, and marketplace experiences. The joint venture will enable Tradeshift to scale its business commerce proposition globally while also allowing HSBC to deploy innovative financial services across various platforms.
(Source: HSBC, Company Website)
- In September 2023, HSBC formed a partnership with Cainiao Network Technology, a logistics unit of Alibaba Group, to introduce an innovative digital trade finance solution for online merchants. This collaboration aims to provide a streamlined and accessible trade finance process for Hong Kong merchants selling on the TMall Global e-marketplace, which Alibaba owns. The new scheme leverages real-time logistics information for credit assessment, enabling faster and more efficient loan approvals. Unlike traditional trade finance processes that require collateral or extensive financial documentation, this solution utilizes comprehensive information provided by Cainiao, including customer background, real-time inventory, and operation status, to assess creditworthiness. This marks the first time HSBC will utilize third-party data for trade finance loan approvals.
(Source: HSBC, Company Website)
Supply Chain Financing Market Report Coverage & Deliverables
The market report "Supply Chain Financing Market Size and Forecast (2021–2031)", provides a detailed analysis of the market covering below areas-
- Market size & forecast at global, regional, and country- level for all the key market segments covered under the scope.
- Market dynamics such as drivers, restraints, and key opportunities.
- Key future trends.
- Detailed PEST & SWOT analysis
- Global and regional market analysis covering key market trends, key players, regulations, and recent market developments.
- Industry landscape and competition analysis covering market concentration, heat map analysis, key players, and recent developments.
- Detailed company profiles.
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Offering, Provider, Application, and Geography
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
This text is related
to country scope.
Frequently Asked Questions
The market growth in the industry is being driven by various factors, including lower financing costs and improved efficiency, globalization and supply chain risk, and the rising need for working capital management.
The supply chain financing market size is expected to grow from US$ 6.5 billion in 2023 to US$ 12.5 billion by 2031; it is anticipated to expand at a CAGR of 8.5% from 2023 to 2031.
Rising fintech solutions are impacting supply chain financing, which is anticipated to play a significant role in the global supply chain financing market in the coming years.
The key players holding majority shares in the global supply chain financing market are Citigroup, Inc, BNP Paribas, Mitsubishi UFJ Financial Group, Inc, JPMORGAN CHASE & CO., Asian Development Bank.
The global supply chain financing market is expected to reach US$ 12.5 billion by 2031.
- HSBC Group
- Royal Bank of Scotland plc
- Citigroup, Inc.
- JPMORGAN CHASE & CO.
- BANK OF AMERICA CORPORATION
- BNP Paribas
- Eulers Herms (Allianz Trade)
- Standard Chartered
- Mitsubishi UFJ Financial Group, Inc.
- Asian Development Bank
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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