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Growth of Invoice Factoring

In the UK, invoice finance is growing in popularity for a huge range of different small and medium businesses. Where once it might have been thought of as a last resort, invoice factoring is now a real mainstream alternative to conventional bank lending options such as overdrafts and loans. But what are the growth figures like in the UK?

According to the Asset Based Finance Association, both total funding and turnover from companies using invoice finance options has been growing positively, demonstrating good year on year growth compared to 2011. In the first quarter of 2012, total client sales were valued at nearly £60bn, up from just over £55bn in 2011. Invoice finance funding has also increased by 4% year on year.

All these figures show that more companies than ever are taking advantage of the opportunities that invoice factoring presents. Whether opting for factoring or invoice discounting, both as good options to improve cash flow and often boost turnover. Not only this, but this healthier cash flow can help to reinvigorate growth and expansion, helping companies to supply bigger customers – and therefore make more money.

There’s a broadly positive picture for asset based finance across the UK, with turnover, total funding and client numbers increasing on what was achieved last year. However, there’s still a conservative approach when it comes to funding that is in evidence with many SMEs. This is perhaps due to the attitude that firms should be buckling down to weather the economic turmoil, rather than taking on new funding. Part of the advantage of invoice finance is that it doesn’t involve taking on any new debt, it simply advances funds that could otherwise only be available after months.

If the UK is to work its way out of economic strife, then invoice finance should be considered as a real option for any business looking to boost its cash flow, turnover and ultimately improve its bottom line.

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