Today the Asset Based Finance Association (ABFA) announced new figures showing this alternative way of business lending is up by 9% compared to the same time last year.
Although still very cautious, Small and Medium businesses are taking the leap to use asset based funding to gain capital for their companies. This shows growth amongst the smaller businesses and a trend of the larger companies using invoice financing. The average industry client size has increased by 15% over the past year.
Incredibly there have been £7.2bn worth of available funds which have not been utilised by SMEs in the UK and Ireland.
Despite the rise in companies using alternative funding there is still a prudent outlook and credit protection payments have shot up 43% in the last quarter, due to companies taking the step to use different funding but not wanting to be left with bad debt.
In Ireland, the market also grew by 9% in advances, with an increase of 2% in the number of businesses using invoice finance.
Kate Sharp, chief executive of the ABFA, said: “With the wider economy continuing to struggle and access to finance generally tight, it is heartening that the invoice finance sector has continued to be able to provide for British and Irish companies”.
“In general, companies using invoice finance are enjoying both a strong uplift in sales and have sufficient funds to enable them to continue growing and trading successfully, which is exactly what our economy needs in these economically challenging times.
“Clearly though, businesses are continuing to be cautious as they seek to manage a very uncertain trading environment, and the forecasts from the OBR earlier this week were concerning. But, there were some innovative initiatives set out in the Chancellor’s Autumn Statement to boost enterprise and these figures from our industry show that there is some reason for cautious optimism.”