Larger businesses are driving momentum for invoice finance.
The Asset Based Finance Association (ABFA) has revealed that the use of asset based finance, particularly invoice finance, has risen by 14 per cent in the past year. The amount of funding tapped via these forms of funding was £21.9bn at the end of the first quarter of this year, versus £19.3bn at the same time in 2016.
ABFA, which represents a range of banks, challengers and alternative finance firms, has attributed this surge to increased demand from the UK’s largest companies. The association says that larger firms are increasingly utilising asset backed finance for diversification or to fund M&A activity.
ABFA’s data indicates that over a third of asset backed financing now goes to businesses with turnover of over £100m. This represents a 23 per cent increase, up from £5.9bn in Q1 2016 to £7.3bn at the end of Q1 2017.
But demand also appears to be increasing at the smaller end of the business spectrum. Small business funding specialist MarketInvoice posted back-to-back monthly origination records (versus all previous months in its existence) in March and April.
“Increased funding for larger companies goes to show that asset based finance is no longer just for SMEs. It is now a significant source of funding for larger corporates too, as they look to execute acquisitive growth strategies or leverage their assets in innovative ways,” said Jeff Longhurst, chief executive of ABFA.
“Asset based finance is now recognised as a fast-growing market, and larger businesses are jumping on the bandwagon – increasingly recognising the benefits of obtaining financing against invoices and other assets.”