Invoice finance, encompassing factoring
and invoice discounting, is seeing a rapid increase in interest
from the UK SME market as the recession plunges on.
It also ultimately may yet prove to be a
lifeline for British asset finance brokers as other lines of
business remain dry.
Results of the National Association of
Commercial Finance Brokers’ (NACFB) recent annual survey show
invoice finance products increased by a staggering 278 percent
year-on-year to £687 million (€777 million), from £182 million at
year end 2007.
This compares to a 7.7 percent fall in leasing
business volume signed by NACFB members, down to £1.1 billion.
According to the NACFB, these statistics are
explained by the fact that many lease brokers are now branching out
into the invoice finance field.
Adam Tyler, the NACFB’s chief executive, said:
“In a contracted market, brokers are having to diversify, and
invoice finance is one of the few areas still relatively unaffected
by the downturn.”
Seeing that business-starved asset finance
brokers could benefit from a more abundant product to sell, the
NACFB is designing a training program with Shire Business Synergies
to help brokers understand invoice finance products, and learn to
recognise which SMEs might have need of them.
The inaugural event will take place on March
26 at Canary Wharf in London. Currently, around one-third of NACFB
members offer invoice finance products, although this proportion is
expected to increase significantly over the next year, especially
if the training program proves popular.
The Asset Based Finance Association (ABFA),
which represents the UK’s invoice finance industry, supported the
NACFB’s assertion that invoice finance was on the up, with CEO Kate
Sharp saying: “Generally our industry is coping very well with the
effects of the downturn, with significant capital still being
advanced and a healthy year-on-year increase of 10 percent in terms
of total sales.”
Ed Rimmer, CEO of Bibby Financial Services,
Britain’s largest independent invoice finance provider, also agreed
that such products were performing well in a tough time for the
commercial finance industry.
“As banks become more risk averse and turn
down more SME funding requests, we will see businesses becoming
more proactive in seeking out stable funding facilities,” he
“2008’s figures show increasing numbers are
turning to invoice finance as a more flexible and guaranteed way of
supporting their cash flow. Our own figures support this with a 15
percent increase in new business in 2008.”
Bibby’s domestic and export factoring products
each saw business volume increases of 20 percent during 2008. He
added that export factoring would likely see further gains as the
euro edged closer to parity with sterling.