Invoice finance could create €112bn in
European GDP growth and nearly 3m jobs by 2020, a report has
revealed.
According to a report by GE Capital into the
economic value of the funding model, at current levels of growth
and usage, invoice finance will contribute €59bn of combined
quarterly GDP across Europe’s four biggest economies and 1.66m jobs
will be reliant on it by 2020.
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Projecting an increase in the uptake of
invoice finance across France, Germany, Italy and the UK, which
would add a further €53bn, the report’s authors calculate €112bn of
combined quarterly GDP and 2.59m jobs would be dependent on invoice
finance in nine years time.
The basis for additional uptake of invoice
finance in the report is given as a consensus among factoring
associations interviewed that 6-10% of businesses in each market
not currently using invoice finance are eligible and would find it
beneficial, which the report equates to a 15-20% boost in terms of
GDP contribution.
GE Capital, which offers invoice finance
within its Commercial Finance and Corporate Structured Finance
divisions, is understandably keen to promote the sector and
compiled the report using statistics from trade bodies, central
banks and interviews, as well as its own independent data. The
economic models used are based on economic, financial, businesses,
labour market and demographic data for each of the four
countries.
The report identifies the provision of very
short term funding, flexibility over use of finances, an easy
application process, and protection against non-payment of invoices
as the main advantages to invoice finance.
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By GlobalDataDisadvantages of the sector, such as cost and
the extra link in the transaction process involved are
acknowledged, but, based on interviews with invoice finance users,
the report concludes the largest barriers to its widespread
adoption are a lack of awareness and its perceived image as a last
resort for struggling businesses and it calls for education
programmes from government, business associations and
providers.
John Walker, national chairman of the UK’s Federation of Small
Businesses (FSB) said: “Many small businesses find it difficult to
access finance through the traditional bank method, with around a
third of applicants being refused. They need this finance to cover
cash-flow and so using invoice finance would help businesses get
paid on time, as well as improve their cash-flow.”
A full report and analysis of the GE Capital report will
appear in the December issue of
Leasing Life.
