Back in March 2020 invoice finance and asset based lending (IF/ABL) providers, like the rest of the country, quickly mobilised remote working to ensure uninterrupted services to their clients. In addition, almost all providers put extensive measures in place to support the 39,000 businesses that relied upon them for cashflow.

These measures included increasing advance rates to help generate additional cashflow and extending funding periods in the expectation that debtor payment days would be likely to increase across the economy.  

It is fair to say that for anyone working in the IF/ABL industry, last year turned out very differently to what we had all initially expected as the pandemic took hold. Businesses found themselves with significant government support and many did not need to draw upon the additional support available from their provider. Nonetheless, the fact remains that IF/ABL providers were waiting, willing and able to support if needed. 

During 2020 and into 2021 we saw by far the lowest number of complaint calls into UK Finance since the introduction of the Standards Framework back in 2013. Some of this of course can be put down to the easing of pressure through the much-welcomed government interventions, but it is evidence that over the last year or so IF/ABL providers have once again shown their strengths, how flexible and proactive the products are by their very nature, and how well they support their clients in even the most challenging of times.

What now for IF/ABL? UK Finance data have highlighted a significant drop in client numbers and utilisation of funds in the last year. However as we look ahead, IF/ABL products are again going to be an essential source of much needed cashflow particularly over the coming months and years.

IF/ABL products can help businesses to re-structure their government loans and support those that have had their financials or balance sheet impacted and are subsequently struggling for other forms of finance. Firms that have built up HMRC arrears and can't get finance due to the reintroduction of Crown Preference could also look to the IF/ABL sector. They are also great products for businesses looking to scale and grow. 

Please join me on 6 July at our Commercial Finance week, as we discuss the opportunities that lie ahead for IF/ABL providers and their role in the recovery, with Kevin Craven, MD of Metro Bank Invoice Finance and Chair of the UK Finance IF/ABL Product Board, along with other UK Finance colleagues.