Asset-based Finance Continues to Grow, Despite Challenging Times

Despite testing business conditions, the latest quarterly figures for the three month period April to June from the Asset Based Finance Association (ABFA) show that the number of companies in the UK and Ireland using asset-based finance continues to rise. There is also an increase in the amount of funding being made available, but because of the current economic climate businesses remain cautious about taking up additional funding.

The latest figures come from members of the ABFA who include major banks and independent providers. The industry’s clients are drawn from across the economy with customers predominately involved in manufacturing, distribution and services, especially recruitment.

Comparing figures to the same quarter last year, the total number of businesses using asset based finance has risen by 4%, pushing numbers up towards 43,000. Invoice discounting remains the most popular form of asset based financing, with the number of companies using it increasing to well over 18,500, up from just over 17,300 in the same period last year.

The ABFA reports that there were total advances to businesses of £16bn, an increase of 2% on the same quarter last year. There was also an increase of 4% in total funding available rising from £22.5bn to £23.3bn for the same period. However, the tough business conditions that have continued to prevail in the UK and Ireland are reflected in the total sales figures of clients which show little change to the same period in 2011.

While the number of businesses using export invoice discounting has stayed comparatively low, there was an increase this quarter of 8% in the number of companies using it compared to the same period last year indicating a positive upward trend in business expansion overseas.

Kate Sharp, chief executive officer (CEO) of the ABFA, said: “At the beginning of the year there was some optimism that there would be business growth, but with the exception of manufacturing, expectations of growth have not been fulfilled. Although there is funding available from our industry, at the moment many companies lack the confidence to take full advantage of the finance available to them.

“However, with 23% growth over the past year in advances to companies with less than £500,000 turnover, it is particularly heartening to see the industry supporting the UK’s economic growth agenda by offering increased financial support to these micro and start-up businesses.”

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