38% Growth in businesses using invoice finance to export

The latest asset based finance industry data published by UK Finance in Q2 2017 reveals that:

The latest asset based finance industry data published by UK Finance in Q2 2017 reveals that:

The latest asset based finance industry data published by UK Finance in Q2 2017 reveals that:

  • Total sales by businesses funding their export activity using invoice finance (factoring and invoice discounting) stood at £7.7 billion at the end of the quarter. This was up 36% on the same period in 2016 (£5.6 billion during Q2 2016).  The total for the first half of the year was up 38% on 2016 (£14.9 billion for H1 2017 against £10.8 billion for H1 2016).[1]
  • Underpinning those sales, the amount of funding advanced to UK clients grew by 13% year-on-year and stood at £21.8 billion at the end of Q2 (£19.3 billion at the end of Q2 2016).
  • 46% of the client businesses supported by asset based finance have an annual turnover under £1 million (19,136 businesses). The industry was providing £1.3 billion in finance to these businesses at the close of Q2, an average of £68,500 per client business.[2]

Commenting on the data, Jeff Longhurst, Head of Commercial, Invoice Finance and Asset Based Lending at UK Finance, said:

?The sector provides vital support to businesses of all sizes, particularly small firms and larger corporates, with a 38% rise in businesses using invoice finance to export. Unlocking the value tied up in unpaid invoices and other assets can be a particularly effective way to release working capital.  It's clear that invoice finance and asset based lending are increasingly seen as mainstream finance options.

?Invoice financing has its roots in facilitating international trade, and as this issue becomes ever more important, it is particularly encouraging to see the turnover growth in businesses using asset based finance to export.?

The data is available from the UK Finance website and was previously published by the Asset Based Finance Association - historic data is available here.

Notes to editor

<ul><li>UK Finance was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers? Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.</li>
<li>The Members of UK Finance who provide asset based finance include the UK high street banks, specialist and challenger banks, the specialist businesses of some international banks and large corporates, and many independent non-bank finance providers.</li>
<li>In 2013, the ABFA established a Standards Framework for its Members and their client. which continues under UK Finance. This Framework incorporates: the Code and supporting Guidance, setting out the standards which clients and potential clients can expect from Members; an independent Complaints Process delivered by Ombudsman Services; and an independent Professional Standards Council. Further information about this Framework can be found at: <a href="http://www.abfa.org.uk/standards">abfa.org.uk/standards</a>.</li&gt;
</ul><p>About Asset Based Finance: there are two basic types of asset based finance.</p>
<ul><li>Invoice Finance: The two main types of invoice finance are factoring and invoice discounting. Both allow businesses to release the working capital tied up in their unpaid invoices.  In both the finance provider will normally purchase the client?s outstanding invoices, providing an immediate initial payment of the majority of the invoice value, with the remainder (less the financier?s fees) paid to the client on payment by the debtor.  Factoring incorporates an added service element, with the financier normally managing the credit control and collections process.  This makes it particularly suitable for smaller businesses.  In an invoice discounting facility, the client would normally manage its own credit control.  Most of the funding currently provided by the industry in the UK is through invoice finance facilities.</li>
<li>Asset Based Lending: An asset based lending facility will provide a broader mix of funding including revolving and amortising structures against the entire range of business assets. Traditionally advances are available against debts, inventory, property, plant and machinery, but can be arranged against intangible assets such as brands and forward income streams.</li>