Asset based finance sector increasingly important in funding UK businesses
By Kate Sharp, chief executive of the Asset Based Finance Association
New research from digital marketing agency SiteVisibility shows that the term invoice finance has been amongst the most popular website search terms when it comes to business finance in 2013. This just underpins the growth and interest from businesses which the wider asset based finance sector is seeing. Since the economy suffered its downturn in 2009, client turnover for the sector has seen a strong upward trend, growing from £211 billion in 2010 to more than £250 billion last year.
Meanwhile actual advances to businesses by the ABFA’s members has leapt 10% year on year to £17.4bn, which is the highest balance of advances since September 2008 and only the third time that this has topped £17bn. With the economy showing clear signs of recovery, it is even more surprising then that according to the latest Bank of England’s report into lending trends (Oct 2013), the annual rate of growth in the stock of lending to UK businesses was negative in the three months to August. Likewise, the stock of lending to SMEs also contracted over this period. This is completely at odds to the demand for asset based finance which the sector is experiencing and highlights the clear need for additional forms of finance from SMEs and larger businesses.
The latest EU figures (June 2013 EUF statistics) for factoring and commercial finance also confirm that the UK is by far the largest market for this type of funding, with total turnover of €143billion. The next biggest market is France with €95billion, Italy with €84billion and then Germany with €81billion. The UK has also seen considerable growth in turnover from the previous year, with the second highest growth across the EU of some 12%. Interestingly though the country which has seen the highest growth is Poland at nearly 19%. All of this combined paints a picture of strong demand from SMEs for additional credit and finance, with the asset based finance sector taking an ever more central role in the supply of it.