10th September, 2012
Asset Based Finance continues its popularity rise despite challenging times
Despite testing business conditions, the latest quarterly figures for the three month period April to June from the Asset Based Finance Association (ABFA) show that the number of companies in the UK and Ireland using asset based finance continues to rise. There is also an increase in the amount of funding being made available, but because of the current economic climate businesses remain cautious about taking up additional funding.
The latest figures come from members of the
ABFA who include major banks and independent providers. The industry’s clients
are drawn from across the economy with customers predominately involved in manufacturing,
distribution and services, especially recruitment.
Comparing figures
to the same quarter last year, the total number of businesses using asset based
finance has risen by 4%, pushing numbers up towards 43,000. Invoice discounting
remains the most popular form of asset based financing, with the number of companies
using it increasing to well over 18,500, up from just over 17,300 in the same
period last year.
The ABFA reports that there were total advances to
businesses of £16bn, an increase of 2% on the same quarter last year. There
was also an increase of 4% in total funding available rising from £22.5bn
to £23.3bn for the same period. However, the tough business conditions that
have continued to prevail in the UK and Ireland are reflected in the total sales
figures of clients which show little change to the same period in 2011.
Whilst
the number of businesses using export invoice discounting has stayed comparatively
low, there was an increase this quarter of 8% in the number of companies using
it compared to the same period last year indicating a positive upward trend in
business expansion overseas.
Kate Sharp, chief executive of the
ABFA, said:
"At the beginning of the year there was some optimism
that there would be business growth, but with the exception of manufacturing,
expectations of growth have not been fulfilled. Although there is funding available
from our industry, at the moment many companies lack the confidence to take full
advantage of the finance available to them.
"However, with a 23%
growth over the past year in advances to companies with less than £500k
turnover, it is particularly heartening to see the industry supporting the UK’s
economic growth agenda by offering increased financial support to these micro
and start-up businesses."
-ends-
For
further information contact: Golley Slater Public Relations – 020 7255 6400
Derek
Harris: [email protected]
Gemma O’Hara: [email protected]
Notes to Editors:
About the ABFA
The ABFA is the body that represents the asset based finance industry in the UK and Ireland. Members range from subsidiaries of major international banks to independent finance providers. The ABFA provides a variety of services to UK and Irish members, including on-line services, educational courses, Government Affairs, PR, and educational and networking events. In addition, the ABFA is a source of information and reference for businesses looking to find out more about the products and services that this industry can offer.
About Asset Based Finance
There are two basic types of asset based finance:
Invoice Finance: Businesses can raise cash against unpaid invoices enabling them to operate without having to wait for clients to settle accounts. Currently this is the most popular form of asset based finance. If required, providers can also take on the responsibility for the settlement of the invoice for an administrative fee.
Asset Based Lending: A mix
of funding including revolving and amortising structures against the entire range
of business assets. Traditionally advances are available against debtors, stock,
property, plant and machinery but can be arranged against intangible assets such
as brand and forward income streams.
