UK invoice financing surges past £20bn mark

Invoice financing has now entered the mainstream as UK companies seek to diversify their funding options, claims the Asset Based Finance Association. Its latest report shows UK lending surpassed £20bn in the last year.

Total lending through invoice financing surpassed the £20 billion (€23.8 billion; $26.8 billion) mark in the last 12 months, a study from the Asset Based Finance Association (ABFA) has revealed.

The study found that the amount of lending secured against unpaid invoices between the second quarter of 2015 and up to the latest quarter reached £20.3 billion, a 5 percent increase on the preceding 12 months. Overall, the study recorded a 27 percent increase in invoice financing over the last five years in the UK.

Invoice financing has increased in popularity in recent years as businesses seek alternative sources of funding, according to the study. ABFA concluded that the search for different avenues of financing will increase as a result of the UK’s vote to leave the European Union in June.

The report follows a survey conducted by Amicus Finance, which found that small and medium-sized enterprises’ appetite for alternative forms of credit, such as invoice financing, was increasing.

In July, the Irish government announced it was entering into a partnership with Bibby Financial Services to manage an invoice financing fund. The fund size is €45 million and is specifically targeted at Irish SMEs.

Jeff Longhurst, chief executive of ABFA, a trade body that represents the UK and Irish asset-based finance industry, said: “There’s increased appetite for asset based finance amongst the UK’s largest businesses. More of these large companies now view it as one of the primary sources of funding, which has pushed the total amount of funds past the £20 billion barrier.”

“Invoice finance and asset based lending are now an established part of the commercial finance market and there is increased appetite from larger UK businesses to secure funding through this route. While the availability of finance from traditional sources was relatively slow to recover from the credit crunch, the asset based finance market opened its door to businesses,” he added.