UK’s Smaller Firms Turn to Asset based Finance

Increasing numbers of the UK’s smaller businesses are turning to invoice finance, against a backdrop of some tentative signs of recovery in the British economy, according to figures from the Asset Based Finance Association (ABFA).

Data for the first quarter of 2013 see smaller firms – those with annual turnover of up to £500,000 – increasingly using asset based finance, with client numbers in this bracket up by 439 or 3% in Q113 compared with Q412. The ABFA adds that over 15,000 of the smallest businesses in the UK and Ireland are supported by asset based finance, using the products for working capital and to fund growth. This is the highest figure for these smallest firms for nearly three years.

Overall the asset based finance industry and the clients it supports have demonstrated “encouraging growth”.  Total sales from businesses using the products are up 9% in Q113 compared to the same period last year, hitting £63bn.

Total funding provided by the industry to clients has also risen, with advances from the ABFA’s members growing from £15.3bn in March 2012 to £16.3bn in March 2013. This figure for funding is “even more notable when set against the contraction seen in other forms of finance provided to small and medium-sized enterprises [SMEs],” comments the ABFA, which notes that UK net lending was down 2% compared to the same period in 2012.

“With the total number of businesses of all sizes supported by asset based finance also rising by nearly 1,000 year on year, it is clear that there is a developing awareness and appreciation of the industry’s products that are available,” it notes.

“It is extremely heartening to see so many of the smallest businesses choosing to use asset based finance to fund their growth,” said Kate Sharp, chief executive (CEO) of the ABFA. “Having recently surveyed accountants we know they say that access to funding is still a major issue for their clients.

“With some signs of confidence returning it becomes ever more important that firms can take advantage of the new opportunities that growth presents. This is where asset based finance already plays an important part, and our industry is ready and willing to do more to help fund the recovery.”

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