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UK companies are making their assets work harder and are increasingly turning to asset-based lending (ABL) to fund growth.
End of year results from the FDA, the UK trade association for the invoice finance and asset-based lending industry, shows that organisations are now releasing working capital tied up in assets like stock, property and plant and machinery. While a large proportion of FDA members are advancing monies against debt, there has been a 70% jump in advances against other assets in the last quarter.
The industry as a whole also performed well in 2006. At the end of December the number of clients exceeded 46,000 and total client sales were 16% ahead of 2005 figures, which means the industry is now worth a staggering £173 billion.
Encouragingly, 2006 was the year companies that do not typically employ invoice finance or ABL products increased their usage significantly. Manufacturing and services clients were still the most prolific users of the product, but more innovative approaches to the structuring of deals has resulted in construction and retail companies taking advantage of more flexible funding.
Kate Sharp, chief executive of the FDA, said: “Last year’s results prove that invoice finance and ABL are now mainstream financial solutions for UK businesses. Not only do companies at the SME level recognise the value of an invoice finance or asset-based lending solution but companies turning over more than £100 million are also getting in on the act. Overall this is very positive news for an industry that has gone through rapid expansion and we expect more of the same in 2007.”
In terms of the popularity of individual products, export factoring has shown
the greatest growth with client sales more than doubling in the last year alone.
FDA members are also reporting increased demand for vanilla invoice finance
products mixed with ABL solutions – domestic factoring plus ABL, and stock
finance combined with ABL have done particularly well.
To view the full report on the statistics for quarter four of 2006 please click
here.