Last year was not the type of “cascade” we thought it would be – at all – as 2022 turned out to be more characterized by a surge of rising rate hikes and new concerns, versus a wave of new deals. Undeterred, we’re back this year to so see what could be infashion for factoring in 2023.

First on our list, the hot new color for this year – Viva Magenta!

Even with the darkening economic outlook in general, it’s looking to be a weirdly vibrant year of adventure in specialty finance as we enter the year with the potential for daring new decisions, goals, and actions.  Some factors will look to experiment with bold new designs by entering or expanding their services in the space via new credit fund and banking partners.  Other organizations will broaden their “palette” by launching new platforms that focus on inclusiveness and empowerment.  In a contrast, some factors will see 2023 as a time to slim down and simplify their compositions, working to sell off or spin off segments of their businesses. Many players see 2023 as a year to try out striking new designs in a market full of opportunity.

Fearless optimism? Maybe, but it’s in line with the 2023 color of the year. Magenta inspires us to take action and make bold new steps.

Much like magenta, which is a combination of two complementary colors, another touchstone of 2023 is finding balancebetween the digital and physical, which sounds a bit like lenders harnessing the power of technology even more. Technology once again makes the list, although this time with more focus on balance.

Second, our stylish concepts for the new year stress a renewed focus on technology and balance. We see balance with the many of the groups we work with directly and indirectly – building their own technology or seeking out new “off-the-rack” tech to integrate into their existing workflows to create efficiencies. More software groups continue to enter the space, trying to incorporate their services into daily workflows, while capturing data, helping to streamline decisions in the process and identify areas of risk within portfolios. Many of the cutting-edge technologies are still early in their development but offer potential for significant improvements in efficiency and accuracy.  Implementation will be a bit of trial and error as we figure out what works best for each factoring and lending platform and how service providers will mesh to create a distinctive and effective ensemble.

Next up,it’s always important to remember we have more colors available to us than just the new “in” color of 2023. This year’s palette also includes unexpected greens with inspiration pulled from earthbound natural shades, which one could liken to focusing on factoring foundations. Given green sits on the opposite side of the color wheel, it’s not surprising it stands in stark contrast to our adventuring Viva Magenta. For some factors and lenders (especially in transportation-related markets or those dealing with inventory), these more natural tones this year are not as avant-garde, but more utilitarian in style. For some, it’s instead a year to review processes and workflows on a deeper level to ensure sufficient checks and balances exist, shore up portfolios and concentrate on cost of capital and operating expenses. It’s about finding a balance in a different way – safeguarding the health of your portfolio.

Many shops are analyzing their underwriting and account monitoring standards to protect against fraud and deteriorating collateral exposures in a new economic environment. A tailored and measured approach can highlight inefficiencies, and like Viva Magenta, create other internal - and potentially dramatic - changes to bolster the fabric of factoring and lending platforms.

And, for whatever design and color board you create for your business this year, versatility is going to be a must-have. Given the economy and volatility throughout the industry, factors and lenders need to be more versatile than in the past. It’s the new essential proficiency. Versatility can be supported through technology or outsourcing to better manage overhead; internal hiring to promote personnel flexibility; incorporating more strategy sessions to stay ahead of the market or shape alternative solutions when needed, or simply finding more capital (and backup capital) for your factoring or lending business.

Overall, this year is about boldness, empowerment, foundational reconnection, and balance – be it vision to deliver on your new overachieving plans or resolve to make it through the challenges in our new credit ecosystem. 2023 will be its own force of nature, much like the color of the year.