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Invoice Finance: Growing in Value

Asset based finance is becoming increasingly valued by small firms, according to the latest figures from the asset based finance association (ABFA). As economic recovery continues to strengthen, this shows that asset based finance options such as invoice finance are becoming increasingly important not only to small businesses, but also to the economy as a whole. More companies are turning to invoice finance especially as it proves to be a great tool for combatting late payment, boosting cash flow and helping growth through injections of working capital.

Amongst firms with a turnover of £0-£500,000 there was a 3% increase in firms using invoice finance facilities, such as factoring and invoice discounting, over the last quarter. This takes the number of small businesses using invoice finance facilities to over 15,000 in the UK market, which is the highest figure for more than three years. This shows that invoice factoring is becoming increasingly important to the UK economy and the small businesses within it.

The benefits are clear – on average, sales from businesses using asset based finance have risen 9% when compared to this time last year, which values total sales at £63 billion. In terms of volume of invoice finance funding, £16.3 billion worth of funding was provided to businesses during 2013 so far, which shows another increase of 6%. Overall, lending from traditional forms of finance has contracted since 2012 by figures of 2%, showing just how instrumental invoice finance is becoming in allowing for a healthy small business sector.

Invoice factoring and invoice discounting are both useful forms of asset based finance, available for all types of business from start ups to medium sized businesses with million pound plus turnovers. Flexible, accessible and quick to secure, this type of financing is becoming more and more important to the UK’s small businesses.

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