New research reveals that UK and Irish business are increasingly turning to invoice finance. Data compiled by the Asset Based Finance Association (ABFA), an industry trade body, shows that invoice finance has reached an all-time high of £22bn of finance advanced to businesses at the end of the fourth quarter of 2016. This is up from £14bn in the first quarter of 2007.
Over the same period, outstanding traditional business loans have fallen by eight per cent from £440bn to £407bn, according to the ABFA.
The rise in invoice finance can be attributed to a wider awareness of the benefits of this source of funding. More SMEs are realising they can secure finance using their assets rather than a bank loan or overdraft.
The new wave of platforms that sprung up to fill the funding gap following the financial crisis also makes the process of accessing cash simple and straightforward. A reason why many of the companies who turned to invoice finance during the credit crunch still retain it as a part of their overall funding model.
Bigger businesses are also starting to tune into invoice finance as a funding option and taking advantage of the emerging trend, MarketInvoice has added a new product specifically targeting businesses with an annual turnover of over £1m.
The platform also recently revealed that businesses that use its products typically grow by 35 per cent per annum. Its recently reported results show its first quarter’s performance, up by 160 per cent from the first quarter of 2016, putting the cumulative value of invoices its funded at £1.2bn. It has an ambitious £2bn lending target for 2017.
Commenting on the success of the platform, chief executive and co-founder Anil Stocker said: “This achievement mirrors industry trends where asset-based finance is increasingly taking market share from traditional forms of working capital options.”