WFY’26: Indonesia’s factoring and SCF market grows 11% to US$32bn

Indonesia’s receivables finance market continued to expand in 2025, supported by strong economic growth, industrial investment and the continued digitalisation of payments and invoicing. In this country report, Cliff Entrekin, CEO of Convergence Capital Group and CEO of TerraTrade, examines how factoring and supply chain finance are developing as businesses seek liquidity against long payment cycles and tighter access to traditional working-capital finance.

The article included in the World Factoring Yearbook 2026 (WFY’26) explores a market where combined factoring and supply chain finance volume reached an estimated US$32bn in 2025, up around 11% year on year. It also considers the dominance of distributor finance and approved-payables programmes, increasing cross-border activity, fintech development and the role of digital infrastructure in expanding access to receivables finance.

Below is an excerpt from his article.

Indonesia’s receivables finance market expanded again in 2025, propelled by an economy that grew at an estimated 5.2 per cent, an aggressive industrial downstreaming agenda, and continued digitalisation of payments and tax invoicing. Total factoring turnover is expected to exceed EUR 0.5bn in 2025, based on FCI statistics showing a total factoring volume of EUR 458m in 2024.

Total combined factoring and supply chain finance (SCF) is estimated at approximately USD 32bn, up roughly 11 per cent on 2024, with funds in use of around USD 10bn. Reverse factoring, distributor finance and approved payables SCF programmes anchored by large domestic principals continue to dominate, while classical domestic recourse factoring grew more modestly. Cross border activity remains a smaller share but is rising as Indonesian exporters of nickel based products, palm oil derivatives, automotive components and electronics pursue deeper integration into regional and global value chains. With Otoritas Jasa Keuangan (OJK) refining multifinance and bank product rules, and with the EU Indonesia Comprehensive Economic Partnership Agreement (CEPA) negotiations concluded in September 2025, 2026 looks set to be the most consequential year yet for receivables finance in Indonesia.

Late payment is structural rather than cyclical. Average days sales outstanding (DSO) for Indonesian SMEs is in the 75 to 100 day range, with longer cycles common in modern trade, mining services and construction. This is one reason distributor finance has been the dominant SCF product in Indonesia for over a decade. Of Indonesia’s roughly 65.5 million MSMEs (UMKM), which employ around 119m workers (about 97 per cent of the workforce) and contribute around 61 per cent of GDP, only a small fraction have ever accessed factoring or SCF. Closing that gap is now an explicit objective of OJK and the government’s MSME and trade agencies.

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To read the whole article and 50 other specialist articles and country market reviews, order World Factoring Yearbook 2026 here.