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UK businesses are increasingly turning to syndicated deals involving invoice finance providers to maximize working capital available for growth. In the last quarter alone the value of syndicated deals undertaken by the invoice finance industry has grown by 40%, according to new statistics from the FDA.
The latest statistics also show that larger organisations have increased their use of invoice finance to fund growth. At the end of quarter three companies with turnovers greater than £1 billion were advanced £2.5 billion compared to £1.8 billion in the previous quarter.
Overall, the industry has grown by 15% with over £13 billion advanced to UK businesses at the end of September. Client numbers have remained stable at around 46,000 however total client sales - the value of invoices transacted by FDA members - grew by 17%.
In the last quarter assets supporting the funding totaled £26 billion, with outstanding debtors accounting for 95% of total security values. However, members are increasingly lending against plant and machinery indicative of the increasing appetite for asset-based lending (ABL) packages.
The propensity for UK companies to release their working capital tied up in assets via ABL is also evident in the retail sector. The number of retail clients using stock finance, a form of ABL, has doubled in the last three months - perhaps revealing the rising inventory levels in the lead up to Christmas and the need to maintain cash flow over this period.
In terms of the popularity of the individual invoice finance products, the preference for invoice discounting product is still strong with sales volumes reaching over £106 billion. Yet the biggest success story in the last quarter has been the 119% growth in the use of export factoring.
Kate Sharp, Chief Executive of the FDA, said: "The future of this industry certainly seems to be geared towards ABL. Our members are increasingly working together to fund large financial requirements of the bigger corporate organizations via syndicated deals. Typically these deals have been put together based on funding a variety of different type of assets.
"We're also seeing sectors not traditionally associated with this industry, such as retail, increase their use of the expending product offerings. The growing realization of the flexibility offered by invoice finance providers bodes well for the continuing growth of the industry."
To view the full report on the statistics for quarter three 2006 please click here.