UK’s smaller firms turning to asset-based finance

Figures from the Asset Based Finance Association (ABFA) show increasing numbers of smaller businesses turning to invoice finance, against a backdrop of some tentative signs of economic recovery.

The latest figures (for Quarter 1, January – March 2013) see smaller firms increasingly using asset-based finance (£0 – £500,000 t/o) with client numbers in this bracket up by 439 or three percent just in the past quarter alone (Q4 2012 – Q1 2013). In total 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 nine percent compared to the same period last year (Q1 2012 – Q1 2013), hitting £63 billion.

Total funding provided by the industry to clients has also risen, with advances from the ABFA’s members growing from £15.3 billion last year (March ’12) to £16.3 billion this year (March 2013), an increase of six percent. This figure for funding provided is even more notable when set against the contraction seen in other forms of finance provided to SMEs (UK net lending was down two percent 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 a thousand year on year, it is clear that there is a developing awareness and appreciation of the industry’s products that are available.

Kate Sharp, Chief Executive of the Asset Based Finance Association, says it is extremely heartening to see so many of the smallest businesses choosing to use asset-based finance to fund their growth: “Having recently surveyed accountants, 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.”