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UK and US Asset Based Finance

Asset based financing methods such as invoice finance are popular not only in the UK, but across big markets such as the US. However, they are often perceived in very different lights, but this is something that is starting to change.

In the US, all business owners will be aware of asset based finance and the solutions that this route to funding presents. Invoice finance and the like are used extensively by all types of companies, from small entreprenuerial businesses to the largest corporations. According to the Commercial Finance Association, asset based finance provided around £113.6bn of funding to US businesses in 2011 – a huge sum.

In the UK, on the other hand, the image of asset based finance is quite different. For a start, this route to funding is not nearly as well known. Invoice finance companies often have a much lower profile and are often seen as exclusively suitable for smaller businesses who are struggling – but this is starting to change.

Pressures created by the ongoing gloomy state of the UK economy – and the continual belt-tightening of the banks when it comes to business lending – are changing the image of invoice finance in Britain.

Kate Sharp, chief executive of the Asset Based Finance Association, commented; “In the UK, this market has traditionally been an alternative market. Businesses think loan first, overdraft second and ABF something like fifth or sixth. But the fact is that ABF can work for small companies with a very small turnover and it can also work for companies with a turnover of £400m-£500m.”

Invoice finance is a versatile solution and more businesses are becoming aware of it as the credit market evolves to cope with ongoing economic downturn. Whereas it might once have been thought of as a last resort, now companies with healthy turnovers and growth prospects are turning to invoice finance as a way to recover and emerge strongly in the coming years.



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