Last week, the unveiling of the GrowthAccelerator £200 million SME investment programme sparked discussion of the growing role of alternative small business finance. This week, we have evidence of the growth of invoice finance in both the UK and Europe.
New data from the Asset Based Finance Association has underlined the increasingly prominent role that invoice finance is playing in facilitating small business growth. According to the association, there was a 12% increase in the use of invoice finance, including invoice discounting and factoring, by UK businesses for the purpose of funding export activity for the year to December 2011. This funding totalled £15.4 billion. Between 2009 and 2011, growth was a notable 45%.
Further emphasising the ever more mainstream role of invoice finance is new information on the use of this small business finance facility across Europe. The European invoice finance market was worth almost £900 billion in 2011, an increase of almost 10% compared with 2010.
In light of banks’ continuing cautious approach to SME lending, it comes as little surprise to see the likes of invoice discounting and factoring playing such a key role in small business finance activity, both in terms of export-focused investment and domestic growth. With bank overdrafts and other high-street lender services still proving unattractive or unattainable to small businesses, as these new figures show, invoice finance is enabling SME cash flow at a crucial time.
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