For factors, the crisis has proved to be a bit of a curate’s egg. For some, the reduction in availability of credit insurance cover has meant that non-recourse arrangements, particularly cross-border deals, have been badly affected.  But for others, the spread between the cost of borrowing and discount rates charged to clients has widened considerably – meaning that as long as risk can be kept under control, significantly improved profits can be enjoyed. So, depending on the availability of funding and the predominance of international deals, business for factors has been typically mixed at the two extremes – either very good or very difficult. Continue Reading

Premier Invoice and Asset Based Lender Venture Finance has published its “The Evolution of Invoice and Asset Based Lending” white paper following a high-level industry think tank. Continue Reading

Research reveals significant increases in credit refusal, driving business owners to seek out alternative funding options

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David Coates, CEO of Davenham talks to Factorscan about how Davenham, a leading UK independent, is faring in the downturn;  Continue Reading

Factorscan talks to Jim Morrison, Divisional Manager at First Capital Financial Services in the United States and Marios Tannousis, Head of Commercial Products at Societe Generale in Cyprus about the popularity of asset-based lending, its resilience in the current downturn and its compatibility with traditional invoice-orientated financing.

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Statistics from the Asset Based Finance Association (ABFA) revealed that the UK’s asset based finance industry continues to grow despite the severe downturn in the UK and world economy.

During 2008, the sector far exceeded expectations, and at the end of the year was advancing in excess of £17 billion to UK businesses.

End of year results from the ABFA show that the industry is worth £208,014 million, a growth of nine per cent on last year’s figure of £191,401 million. This form of finance, which allows companies to release liquidity tied up in assets, has undergone rapid growth recently and is growing faster than general lending.

While the majority of advances are against debt, such as sales invoices – the latest figures highlight that advances against stock are on the rise. Over £1,603 million, an increase of 168 per cent on 2007’s, was advanced to companies during 2008.

The falling pound also continues to effect UK businesses. The use of export invoice discounting jumped by 34 per cent during 2008 indicating that more businesses are looking overseas in order to find new contracts, perhaps in an effort to move away from the slowdown in the UK.

Kate Sharp, chief executive officer at the ABFA, said: “It is no surprise that as a result of the tightening credit market, more and more companies are using their assets to their advantage. Despite limited liquidity elsewhere, the asset based finance industry has proven its resilience and has shown that it can continue to grow in tough economic conditions. More importantly, our members have given UK companies who have experienced tightening lending conditions a lifeline.”
The sector split for clients using asset based finance is evenly split between manufacturing and services indicating its broad appeal to the business community.

Contributed by Factorscan
www.factorscan.com

Contributed by Gary Quaife, Head of the Edward Symmons Collateral Review and Valuation Team. 

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Factors in the UK and beyond are experiencing a tremendous increase in the level of enquiries from hard-pressed SMEs suffering cash flow problems in the current economic downturn. But while the sales leads are flooding in, factoring executives are not rubbing their hands together and grinning just yet.

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