The Asset Based Finance Association (ABFA) has today announced new quarterly (Q3) figures showing this important form of business finance has grown more than all other forms of lending, with total advances up 9% compared to this time last year. Total funding by the ABFA's members to businesses this quarter has now reached £16bn. Notably, this increase in advances is taking place whilst client numbers remain 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% 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 which is open to firms is being accessed, with £7.2bn of available funds not being utilised by clients. Turnover from British and Irish 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%. Credit protection payments have also shot up 43% this quarter, rising from £4.9m last quarter to £7.0m. giving credence to the views expressed of an imminent further period of recession.
In Ireland, the market also grew by 9% in advances, with an increase of 2% in the number of businesses using invoice finance.
Kate Sharp, chief executive of the ABFA, said:
"With the wider economy continuing to struggle and access to finance generally tight, it is heartening that the invoice finance sector has continued to be able to provide for British and Irish companies.
In general companies using invoice finance are enjoying both a strong uplift in sales and have sufficient funds to enable them to continue growing and trading successfully, which is exactly what our economy needs in these economically challenging times.
Clearly, businesses are continuing to be cautious as they seek to manage
a very uncertain trading environment, and the forecasts from the OBR
earlier this week were concerning. But there were some innovative initiatives
set out in the Chancellor's Autumn Statement to boost enterprise, and
these figures from our industry show that there is some reason for cautious
optimism".
To view the full report on the statistics for Quarter Three 2011 please click here.