FEATURE: RAISING FINANCE
Rising popularity of invoice finance
New research shows an increase in the number of businesses using invoice finance - but firms remain cautious
N Kate Sharpe, ABFA chief executive
ew quarterly figures for invoice finance have shown that this important form of business finance has grown more than all other forms of lending, with total advances up nine per cent compared to this time last year. Total funding
by Asset Based Finance Association (ABFA) members to businesses in the third quarter of 2011 reached £16bn. Notably, this increase in advances took place whilst client numbers
remained relatively static, suggesting good growth amongst existing clients and a trend towards larger businesses using invoice finance. The average industry client size has increased by 15 per cent over the past year. However, in the face of the current economic difficulties, the new
figures also indicate that British SMEs and larger companies are continuing to be cautious. Not all of the available finance that is open to firms is being accessed, with £7.2bn of available funds not being utilised by clients.
‘In general companies using invoice finance are enjoying both a strong uplift in sales and have sufficient funds to enable them to continue growing’
Turnover from British companies using invoice finance has risen though, exceeding £60bn for first time, standing at £62.3bn for this quarter suggesting that firms which use invoice finance are growing their sales and continuing to trade successfully. The uncertain outlook also appears to be making SMEs more prudent, with non recourse business (where the funder takes on the risk of a potential bad debt) growing ahead of trend at 18 per cent. Credit protection payments have also shot up 43 per cent in Q3, rising from £4.9m in the previou quarter to £7.0m, giving credence to the views expressed of an imminent further period of recession.
32 CHAMBERLINK FEBRUARY 2012
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