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Glenn Blackman of Cashflow Acceleration Limited has reported that pure invoice finance funding, by Asset Based Financing Association members, exceeded £12.6 billion at the end of last year. Therefore, invoice finance is clearly fulfilling the funding needs of a large number of UK businesses.
“In order to better tailor our products to meet customer needs, and hence grow the market further, it is helpful to consider business’ perceptions of the shortcomings of invoice finance at present.
“The research that we have conducted in the past identified that a significant proportion of businesses feel that ‘cost‘ is the greatest barrier to increasing the uptake of invoice finance. However, to better understand the other short comings of existing invoice finance offerings, we asked a sample of 100 SME businesses (Small and Medium Sized Enterprises) to put aside cost as an issue and tell us what other aspects of invoice finance arrangements they didn’t like.
“The results were as follows:
- Funding limits 20%
- Audits 18%
- Unapproved invoices 17%
- Paperwork 13%
- Personal guarantees 12%
- Electronic payments taking 5 days 7%
- Upsetting some customers 5%
- Time from invoicing to receiving funds 3%
- Credit limits 3%
- Lack of communication 2%
“Funding limits and unapproved invoices, when combined, accounted for 37% of the responses. These both relate to additional funding controls over and above the initial payment percentage used to determine the level of funding. These types of restrictions are commonly applied across the invoice finance industry and are considered by many to be the cornerstones of controlling risk. However, the fact remains that these items were highlighted as ‘pet hates’ by a significant proportion of businesses.
“What is also interesting is that there are several items within this list that can be addressed by products that are already on the market, but perhaps are not well known. For example, ‘paperwork‘ was mentioned by 13% of the respondents and there are products which already operate in a paperless fashion. Furthermore, there are providers who are prepared to provide funding without personal guarantees in some situations. Often these niche products may not be obvious to newcomers to the market.
“In summary, within a market that is clearly already providing significant funding to UK businesses, the above list sets out a number of items that could help some funders make their product offerings even more attractive to prospective customers.”
Glenn Blackman
Article contributed by Glenn Blackman MBA MCIM, Managing Director of Cashflow Acceleration Limited, a specialist invoice finance brokerage. Glenn also writes regarding invoice finance and related matters at http://www.glennblackman.co.uk/
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May 25th, 2011 at 7:17 pm
I have had some feedback from within the invoice finance market regarding my article “What Customers Hate About Invoice Finance” specifically that it does not support the industry. This was not my intention at all.
I am a staunch supporter of the invoice finance industry, having worked in it for most of my career, and I am also a staunch supporter of its customers – seeking the best deals available on their behalf.
My only purpose in writing the article was to share some research, free of charge, with my industry peers in order to help them to better understand the customer’s perceptions about what customers feel could be improved within our industry.
My goal is to aid the expansion of the invoice finance market by helping the providers better tailor their products to what the customers want.
My article also sought to point out that there is a lack of knowledge amongst customers about what is available within the invoice finance market as many of the issues that they raised have already been solved by particular invoice finance providers and products that are already available.
Perhaps a better title would have been “What Customers Would Like Us to Improve About Invoice Finance”. Well . . . at least you all read it!
Glenn
October 10th, 2011 at 9:49 am
Dear Glenn Blackman;
Having just read your article – “what customers hate about Invoice finance”, I must add my appreciation to you in taking the time and trouble to conduct the research needed and publishing the results.
I am surprised that anyone would see this in such a negative way. Surely any Business/Industry needs to listen to it’s customers and fine tune the way it behaves and conducts its business if it is to survive.
As a broker who is new to this part of the Industry, it has focused my attention more on the differences between various “lenders” and the need to ensure that the most appropriate provider is contacted on behalf of the client rather than just using two or three firms that have contacted me.
I now know what questions to ask lenders before any recommendation is made.
Once again thanks Glenn – keep up the good work.
respectfully;
Charles Martin – Charles Martin Finance
October 11th, 2011 at 9:58 am
Thanks for your comments Charles – your support is appreciated. Glad you found the results of interest. We also have a UK Invoice Finance Research Group on Linkedin if you would like to join (its free of course) and contribute to the discussion regarding the various invoice finance related research findings as we publish them (there is a link from my blog if you need it).
Thanks again.
With kind regards,
Glenn