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Over £13 billion has been advanced to UK companies by the invoice finance and asset based lending (ABL) industry in the first quarter of 2007. The amount of funds advanced demonstrates the growing popularity among SMEs and large corporates to use assets as a means of funding business development.
These statistics come from the latest results from the FDA, the UK trade association
for invoice finance and asset based lending industry. The first quarter report
revealed that the industry is worth more than £40 billion already this
year and, if growth continues, it is expected it will break the £200 billion
barrier by December.
Of the 47,785 companies that accessed invoice finance and ABL funding, the biggest
user was the services sector. The number of clients from this sector increased
by 23%, overtaking manufacturing to become the industry's most prolific user.
Other sectors that showed an increased appetite for invoice finance and ABL
included construction (137% increase), and retail (61% increase).
An ongoing trend is the attraction of invoice finance and ABL for larger companies, using the product to help fund mergers and acquisitions. In the past year the number of companies using the finance option with turnovers of £10 million and above has increased by 14% with funds advanced increased by 45%, equating to over £7.5 billion to date.
Kate Sharp, chief executive of the FDA, said: "The industry has had a great start to the year, which is a growing acknowledgement of ABL as a prime source of corporate finance. The sector analysis is particularly interesting to note as FDA members are continuing to find ways of providing finance in business areas that have historically been more challenging, such as retail and construction."
"Companies are also more aware of the fact that not only are they able to raise finance against debtors, but that plant and machinery as well as other assets such as intellectual property or art can also be funded against. The industry is constantly evolving and the flexibility FDA members are able to offer clients is testament to the industry's popularity."
Other highlights from the first quarter report include:
- Funding against outstanding debtors still remains the cornerstone of ABL with
a total of £26 billion funds secured. This equals a growth of 16%.
- The number of companies leveraging stock to raise finance has increased by
108%, while those utilising stock plus asset based lending has grown by 250%.
- Funds advanced on plant and machinery between Q1 2006 and Q1 2007 has increased
by 140% with £470 million currently advanced.
- FDA members led 50 syndicated deals in the quarter ending March 2007, advancing
over £740 million.
- Average number of debtor days for both factoring and invoice discounting clients
has also increased from a year ago, to 59.7 and 58.7 respectively.
To view the full report on the statistics for quarter one of 2007 please click
here.