As the New Year begins, members of Factorscan’s Editorial Board in the UK, Spain, Canada and Singapore, share their thoughts on the year that was, and consider what may lie ahead in 2012.

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Invoice finance has continued to grow in popularity for both SMEs and larger companies according to a new economic report and quarterly figures released today by the Asset Based Finance Association (ABFA). Total advances from members currently stand at £15.7bn, showing strong year-on-year growth of 12%.

This growth comes on the back of continued growth in advances over the past five quarters and shows that UK and Irish firms are increasingly opting for this type of finance over other forms of lending. The latest figures also show invoice finance clients are again choosing not to access all of the funds available to them. Total available funds this quarter were £22.2bn, with £6.5bn of finance available but not drawn.

Of the total funding provided by members, SMEs received almost 40%, or just over £4bn this quarter.  A decreasing gap in the level of advances between SMEs and businesses with turnover above £100m suggests a growing confidence amongst SMEs as they get comfortable with increasing debt levels. This is supported by total clients’ sales growing 14% over the past year to reach £59bn.

The latest ABFA economic report also shows that export and import factoring have both grown substantially, enjoying a year-on-year rise in client sales of 48% and 47% respectively. This leap in demand for import and export factoring indicates that while the UK market remains sluggish, clients are looking to customers outside of the UK to buy their products, and are choosing this type of finance to help facilitate overseas trade.

Credit protection payments by ABFA members to their clients have also continued to decline, dropping by 27% over the last year to total £4.9m, consistent with the UK-wide trend of lower default rates on loans and a stable rate of write offs. Together with the shortening average debtor day numbers both these factors reflect one of the key product benefits of asset based finance, namely introducing firmer debtor disciplines.

Kate Sharp, chief executive of the Asset Based Finance Association, said: “The figures in our new economic report indicate growing business confidence amongst invoice finance clients, both SMEs and larger firms. This contrasts markedly with the general negative sentiment concerning the state of the wider UK economy and a general contraction in the stock of lending. Firms using invoice finance are seeing rising sales and are continuing to have access to an ample supply of finance. With total client numbers rising by 244 in the last quarter, the invoice finance sector is providing much needed finance to many UK and Irish businesses and is, and will continue to be, a significant contributor to supporting the wider economic recovery.”

Article contributed by the ABFA

The next 10 years will herald a ‘seismic shift’ in the UK business landscape, but business fundamentals such as access to funding will still apply, according to a futurology report launched this week by Bibby Financial Services. Continue Reading

UK businesses remain worried about the future, with only one in three expecting their business to expand in the next six months. For 28% of businesses, the primary concern is winning new business. Continue Reading

Glenn Blackman of Cashflow Acceleration Limited has now published two research summaries detailing the results of all the invoice finance related market research that he conducted over the last year. Continue Reading

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Glenn Blackman of Cashflow Acceleration’s recent survey of 100 SMEs (small and medium sized enterprises) indicated that 27% of SMEs believe invoice finance could be more well known amongst businesses, were it advertised by banks.  Continue Reading

“Latest figures published by the Bank of England have revealed that lending by Britain’s banks to businesses continues to fall this year. SMEs are being particularly hard hit, despite the Project Merlin initiative. But the blame does not only lie with the banks. Fear of rejection and reduced levels of trust have often resulted in businesses approaching providers for funding too late, by which time their financial position has inevitably weakened.

“Whilst there is now mounting criticism regarding the lack of bank lending, banks have also previously been criticised for irresponsible lending. It is essential that banks and funders ensure that responsible frameworks are in place for the benefit of the whole economy. Whilst economic figures have shown growth, the reality is that day-to-day trading remains tough. Therefore, looking at funding solutions which allow greater levels of flexibility and growth in line with turnover is an excellent way of ensuring funding is available when any opportunities arise.

“Taking all of this into account, I think we will start to see an increase in the use of alternative forms of funding, such as invoice finance, where providers have the scope to look beyond rigid financial criteria. This would also allow them to consider the wider picture of a business’ health and suitability for the many tailored solutions available to assist the UK SME.”

Evette Orams - MD, Hilton Baird

Contributed by Hilton Baird

Factorscan talks to the managers of two independent factors, Positive Cash Flow Finance and First Capital Factors – both of which launched at tipping points in the economic environment  Continue Reading

Glenn Blackman of Cashflow Acceleration’s recent survey of 100 SMEs (small and medium sized enterprises) indicated that 59% of SMEs anticipate problems raising business finance during 2011. Continue Reading