15th September 2014

Irish SMEs show 40% increase in access to asset based finance

• Half of total funds advanced were used by Irish companies with €10m+ turnover
• €1.3bn in asset based finance in use by 2,000 Irish companies at any one time
• €800m unused credit still available to Irish companies for funding purposes

Invoice finance remains a critical working capital tool in the Irish SME sector, as the number of companies with a turnover of less than €500,000 who accessed asset based finance increased by almost 40 per cent in the past year, according to new figures from the Asset Based Finance Association (ABFA), the body representing the asset based finance industry in the UK and Ireland. The majority of clients utilising asset based finance register an annual turnover of between €1m and €5m, while approximately one quarter of all clients have sales in excess of €5m.

The sales turnover generated by Irish companies using asset based finance reached more than €11.9bn, up 15 per cent on the same figure for 2013. The figures also show that over half of the total funds were used by Irish companies with a turnover of more than €10m.

During the quarter to the end of June 2014, €1.3bn of asset based finance was advanced to nearly 2,000 Irish businesses. Advances to companies with turnover of between €1m and €5m grew by 13 per cent to €324m in Q2 2014, while advances to companies with turnover of between €10m and €50m grew by 36 per cent to €263 million.

Advances to companies with turnover of between €50m and €100m grew to €172m in the quarter, an increase of 22.8 per cent and companies with a €100m+ turnover grew their advances to €249m, up 11.6 per cent.

Client Annual Turnover Bands:

According to the ABFA, demand has partly been fuelled by constraints on traditional lending, but it has also gained traction as more businesses gain an understanding of how borrowing against the value of their invoices and other assets can free up cash to invest in growth.

ABFA members have a total of €2.1bn available for funding, demonstrating that there is still a significant amount of unused credit available for funding purpose, as currently only €1.3bn is being utilised. This availability figure is up 10 per cent on the same figure for year end of June 2013.

Eddie Brown, Chairperson of ABFA Ireland and Managing Director of Managing Director of Ulster Bank Commercial Services Limited says:

"Today’s results are extremely positive, showing the improving performance of Irish companies across a range of sectors. Although the overall number of businesses accessing asset based finance hasn’t changed significantly, the amount of funding agreed with our members has increased compared with the same period last year, reflecting the continued confidence in the Irish economy."

"We are seeing more and more businesses of all sizes and types taking advantage of invoice finance to fuel their growth, particularly as more traditional forms of lending remain subdued. More businesses are viewing their invoices as what they are – one of their biggest assets. Asset based finance – particularly invoice finance – is now a realistic alternative to traditional lending for SMEs and is fast becoming a standard part of the finance suite for businesses."

"However, we still have a significant amount of unused capital available to us that companies all over Ireland could be accessing. As the economic recovery hits its stride, having funding that automatically expands with your business is a huge bonus. The ability to increase the size of your invoice finance facility as your business grows is one of the products biggest strengths. This is a huge plus for many businesses, because they don’t have to keep re-evaluating their funding position and proving themselves to their lenders."

Irish companies utilising asset based finance come from a wide number of sectors:

The full statistical release, along with historical data, is available at: https://www.abfa.org.uk/members/statistics.asp