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Latest figures released by the FDA today reveal that the invoice finance industry continues its rise as the funding method of choice for SMEs and large corporate organisations.
Total funds advanced to companies in quarter one exceeded £11 billion and it is anticipated that the industry will be worth around £158 billion at year end - an increase of £10 billion on 2005 - should growth continue to mirror this quarter's activity.
According to the statistics, over 44,000 UK companies now use invoice finance with 47 per cent choosing factoring and 37 per cent using invoice discounting. This year the statistics also tracked advances against other assets, such as stock, property and plant and machinery, to reflect the industry's evolution into wider product ranges.
The key figures revealed by quarter one statistics are:
17 per cent overall growth in total client's sales
92 per cent increase in the use of export factoring since the end of 2005
13 per cent growth since the end of 2005 and 21per cent since Q1 2004 for clients
turning over £100 million plus
30 per cent growth in the number of clients using syndicated deals since the
end of 2005
7 per cent growth in use of invoice finance by clients with a turnover between
£0 - £500,000, signifying an increase in start-up activity since
March 2005
Commenting on the results, Kate Sharp chief Executive of the FDA said: "We've had an incredible start to the year with an increased number of clients, resulting in a rise in advances and sales across most products. It is particularly pleasing to see the continued growth of clients in larger turnover brackets. We've not seen this level of activity since December 2002, so it all points to it being a healthy year for invoice finance providers."
Manufacturing remains the largest industry sector to use invoice finance (33%), followed by services (29%) and distribution (20%). For the first time since the introduction of the industry statistics, the FDA also analysed the use of invoice finance by the retail and construction industries - two sectors not traditionally associated with the product.
"We decided to analyse the use of invoice finance by the retail and construction industries as a growing number of our members are providing funding to companies within these sectors. While the figures are relatively small in comparison to the more established users, like manufacturing, it shows a growing demand for invoice finance," says Kate.
Encouragingly, the average number of debtor days outstanding for both factoring
and discounting clients has decreased to 58.9 and 57.9 days respectively.
To view the statistics in more detail CLICK HERE.
To view historical industry figures over the last decade CLICK HERE.