Growth in use of Invoice Finance – both Invoice Discounting and Factoring

According to the latest Invoice Finance market figures by the Asset Based Finance Association (ABFA) there has been some significant growth in the use of Invoice Finance in the first 3 months of 2011 compared to the same period in 2010.

Domestic Factoring, where the business and its customer invoices are both UK based rose by 7% in Q1 2011 compared to Q1 of 2010, worth some £4.5billion alone in Q1.

Domestic Invoice Discounting also rose from Q1 2010 from £41.2billion to £47.5billion, which is a year on year rise of 15%.

Export Factoring, where a UK business gets advances on invoices to non UK businesses, also saw an increase and although the figures advanced are lower in value at £408m for Q1/2011 they represent a 50% rise against the same period last year of £272m.

Other increases were evidenced in Export Invoice Discounting, which was up 22% in Q1/2011 versus Q1/2010 from £2.6billion to £3.2billion and Import Factoring was also up an impressive 36% over the same period last year with an increase from £168m to £228m.

Total Sales for the Invoice Finance industry therefore rose by 15% from £48.6billion to £55.9billion for Q1/2011 compared with the same period in 2010.

Outlook

Considering the mantra from the banks is the UK business has no appetite to borrow the figures do suggest that perhaps not all press statements from the banks’ spokespeople should be taken at face value.

It is out understanding that its not an appetite for borrowing in its entirety per se, but more a lack of appetite for borrowing that is perhaps perceived as too risk adverse for the banks, uncompetitive and not in the interests of the customer.

UK small businesses are going to need funding, be it for short term cash flow, re-investment, capital expenditure or growth and in the current climate, more and more businesses are forgoing the traditional bank borrowing with increased costs and security demands, and voting with their feet and seeking alternative funding methods.





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