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Growth of Invoice Finance

Businesses are continuing to struggle to find finance in the UK lending environment and this has lead to a growth in invoice finance use amongst all types of companies. The failure of traditional bank lending to deliver has lead to the increasing take up of factoring and invoice discounting, as companies try to improve cash flow and deal with late payment in the face of rejection from the banks. According to the latest figures, invoice finance is definitely going from strength to strength.

During the final quarter of last year, according to the Asset Based Finance Association, invoice discounting was up 16% year on year to value £62.5 billion. This is compared to a contraction in net lending of £2.4 billion by the Bank of England over the same sort of period.   Recruitment firms and haulage companies are some of the biggest subscribers to this sort of invoice finance, but many businesses who sell on credit via invoices are eligible to benefit. Indeed, the ABFA estimates that as many as 250,000 UK businesses operate in markets that are ideally suited to invoice factoring.

If you think that your business could benefit from invoice finance then it’s worth thinking about your finance options. Factoring and invoice discounting can release cash flow and help to stop late payment being an obstacle to growth – you can get access to 90% of an invoice’s value often within 24 hours of releasing it to your factoring lender. Factoring also comes with a full credit control system, with the lender taking over responsibility for collection, a big advantage for smaller businesses without a dedicated finance department. Invoice discounting allows your business to stay in control of collection, and is more suited to medium sized businesses.

Both of these forms of alternative finance are starting to grow – so now’s the time to think about how they could benefit your business.


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