Data from Europe has shown how significant invoice finance solutions have become to the business sector, especially amongst SMEs. As a source of working capital, it’s effective in giving companies the cash flow they need for day to day running as well as growth.
European lending conditions remain tight and restrictive, much like the UK where banks are looking to minimise their risky debt and often reject small businesses for funding for this reason. This is the first time that invoice finance has been looked at as a whole across Europe, including invoice discounting, supply chain finance, accounts receivable financing and factoring.
The European invoice finance market was worth an estimated £892bn in 2011, gorwing from £811bn in 2010 and £690bn in 2009. This shows a compound annual growth rate of around 10% a year, an impressive and large scale expansion in such a large area.
This shows that invoice finance is becoming a significant source of capital for European businesses.
Business owners, banks and invoice finance providers have all predicted that this method of finance will continue to grow, especially in the light of ongoing economical difficulties.It will also be increasingly adopted by banks and big businesses as an alternative to traditional credit options.
Invoice finance has been shown to give companies affordable, accessible and flexible funding, raised off the back of unpaid customer invoices. Rather than wait thirty, sixty or ninety days for payment, it’s possible to release the majority of funds from an invoice within 24 hours.
In the UK, the recent Breedon report has predicted a shortfall of £190bn in the next five years. As Europe shows, invoice finance will be one key way of plugging this gap. It has already taken on this task on the continent, and has been embraced by a wide range of businesses looking for funding.