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September 26, 2011updated 12 Apr 2017 4:11pm

SMEs use invoice finance to ease worries

The latest quarterly statistics from the Asset Based Finance Association (ABFA) reveal that asset-based finance is currently providing a viable alternative to more traditional bank lending. The figures show that businesses turning over less than £5m (5.7m) which make up 84% of the 41,486 invoice finance clients are particularly benefiting from flexible funding solutions in the form of invoice finance.

By Evette Orams

The latest ABFA statistics show business owners exploiting the cash flow solutions available, says Evette Orams

 

Bar chart showing the latest ABFA figuresThe latest quarterly statistics from the Asset Based Finance Association (ABFA) reveal that asset-based finance is currently providing a viable alternative to more traditional bank lending.

The figures show that businesses turning over less than £5m (€5.7m) – which make up 84% of the 41,486 invoice finance clients – are particularly benefiting from flexible funding solutions in the form of invoice finance.

It is especially cheering to see that SMEs still have lending options available to them, as more traditional funding solutions remain difficult to access and businesses fear for their growth prospects, amid further reports that the UK could suffer a double-dip recession.

Encouragingly, there has been an annual rise of 12% in total advances made to invoice finance clients in the second quarter of 2011, compared to the second quarter of 2010, with the £15.8bn advanced during the quarter being used to overcome a range of cash flow pressures during the current economic and trading conditions.

The figures also show client sales are rising by 14% on an annual and quarterly basis, indicating invoice finance is facilitating growth and expansion.

Invoice finance facilities, particularly factoring, help businesses to get their money through the door thanks to the dedicated ledger management service the funder provides, which is particularly helpful in the current climate where late payment is rife.

The results speak for themselves, with credit protection payments made to clients falling by 28% annually as the instances of debtor default declined.

Ultimately, the latest findings indicate SMEs are considering more of the options available to them. Given the current economic climate, we urge business owners to continue to explore the range of cash flow solutions in order to ensure their companies are equipped to deal with the challenges they face.

Evette Orams is managing director of Hilton-Baird Financial Solutions

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