View all newsletters
Receive our newsletter – data, insights and analysis delivered to you
  1. Analysis
December 19, 2011updated 12 Apr 2017 4:10pm

The benefits of asset-based finance

Even with economic growth stagnating and UK businesses placing more emphasis on stability, asset-based finance (ABF) users have reported impressive growth in the last quarter This growth has been consistent over the past year, and highlights the benefits of such flexible forms of finance.

By Evette Orams

ABFA Q3 stats show asset-backed finance providing timely support to SMEs.

 

Even with economic growth stagnating and UK businesses placing more emphasis on stability, asset-based finance (ABF) users have reported impressive growth in the last quarter. This growth has been consistent over the past year, and highlights the benefits of such flexible forms of finance.

The latest figures from the Asset Based Finance Association (ABFA) found that sales from members’ clients rose annually by 16% during Q3 2011, surpassing £60bn (€71bn) for the first time in the industry’s history.

Interestingly, total advances by ABFA members rose by 9% over the same period to £16bn, providing a sharp contrast to wider bank lending, which has steadily declined since April 2009. Indeed, lending to private non-financial companies during the 12 months to the end of September 2011 fell by 2.3% on an annual basis.

This variation would have been even more exaggerated had asset-based finance users chosen to utilise the full £23.2bn that was available to them, with many instead remaining cautious given the economic outlook.

Late payment remains an issue hindering SMEs and bad debts are on the rise. The threat of the latter is real and the shield provided by ABFA members is demonstrated by the level of credit protection payments made to their clients climbing to £7m during Q3 2011, a 43% increase from the previous quarter. Encouragingly, asset based finance users are sensibly opting for non-recourse facilities that incorporate bad debt provision, as demonstrated by a year-on-year rise of 21%.

With SMEs facing difficulties in accessing traditional bank finance, asset-based finance continues to support and fill the funding gap. It’s great to see client sales exceeding £60bn – running a business is arguably harder than ever given the economic climate, so this landmark is an achievement for ABF clients.

Our task as an independent commercial finance broker remains to continue instilling the virtues of such effective options that are at the disposal of businesses. By working closely with our funding partners, we can communicate this vital message that the asset-based finance industry is here to support the recovery and growth of our economy.

Evette Orams is managing director of Hilton-Baird Financial Solutions

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Thursday. The leasing industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Leasing Life