7 February 2016 09:00
UK leads the way in asset-based finance funding
More small firms in the UK use asset-based finance to fund their businesses than those in Europe.
Pan-European data from the EU Federation for Factoring and Commercial Finance shows that asset-based finance supports 15% of UK businesses (by turnover). This compares to an average of 10% across Europe.
Countries such as France and Germany are lagging behind the UK when it comes to the proportion of the economy supported by asset-based finance and in absolute terms. Asset-based finance in the UK is worth €189.7bn, compared to €117.7bn in France and €100.5bn in Germany.
The Association Based Finance Association (ABFA) reports that around 80% of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the other 20% represents the fast-growing area of asset-based lending, in which businesses can raise funding secured against a other assets such as inventory, property and machinery.
Jeff Longhurst, Chief Executive of the ABFA, said:
"UK financial services firms have long been real innovators in developing invoice finance products, and businesses in the UK have traditionally been keen to access this funding. Now the rest of Europe is also following suit."
According to statistics from the ABFA, Q3 2015 saw the use of asset-based finance in the UK and Ireland hit a record high, with businesses securing £20bn through asset based finance for the first time ever, up 4% from £19.3bn in the previous year.
"Invoice finance has played a pivotal role in keeping funding flowing to SMEs as more businesses look to complement or replace traditional bank lending with asset-based finance. Given how important EU markets are to UK businesses, perhaps what is most encouraging is that more businesses across Europe are realising the value of asset-based finance - it's up 5% overall - and it has cemented its position as a key alternative source of funding for businesses of all sizes."