Types of Factoring service companies and reasons?

Two types of factoring business can be classified, namely bank-owned and independent factoring firms. There is a clear distinction from the results between factoring firms owned by banks and smaller independent factors. Bank owned factors has more diversified portfolio in terms of a firms of different sizes, while the smaller ones were largely positioned at the smaller end of the market.

The main reason for this relationship is the degree of competition between large and small factors. The larger factors enjoy economies of scale, have access to more funds, and can acquire more information through the parent bank at relatively little cost. The smaller factors have limited resources and, consequently, may acquire the more marginal businesses.

There is a correlation observed in recent studies that between the size of the factor and the size of the client, ie that the smaller the factoring company the more willing it is to take clients with small turnover.