The Asset Based Finance Association (ABFA) has today announced new quarterly (Q3) figures showing this important form of business finance has grown more than all other forms of lending, with total advances up 9% compared to this time last year. Total funding by the ABFA's members to businesses this quarter has now reached £16bn. Notably, this increase in advances is taking place whilst client numbers remain relatively static, suggesting good growth amongst existing clients and a trend towards larger businesses using invoice finance. The average industry client size has increased by 15% over the past year.
However, in the face of the current economic difficulties, the new figures also indicate that British SMEs and larger companies are continuing to be cautious. Not all of the available finance which is open to firms is being accessed, with £7.2bn of available funds not being utilised by clients. Turnover from British and Irish companies using invoice finance has risen though, exceeding £60bn for first time, standing at £62.3bn for this quarter suggesting that firms which use invoice finance are growing their sales and continuing to trade successfully.
The uncertain outlook also appears to be making SMEs more prudent, with non recourse business (where the funder takes on the risk of a potential bad debt) growing ahead of trend at 18%. Credit protection payments have also shot up 43% this quarter, rising from £4.9m last quarter to £7.0m. giving credence to the views expressed of an imminent further period of recession.
In Ireland, the market also grew by 9% in advances, with an increase of 2% in the number of businesses using invoice finance.