Asset and invoice finance return to growth in 2018

Its analysis found that total advances at the end of December 2018 totalled £22.7b, up over £100m from the previous quarter and up 2.4% (over £500m) on the previous year.

This growth follows two consecutive quarterly declines in the balance of advances in the first half of 2018.

Larger companies, those with an annual turnover of £100m or more, continue to drive borrowing. The balance for invoice finance and asset-based lending for these companies is £7.6bn, accounting for a third of all lending despite larger companies representing just 1% of borrowers. As of the end of December 2018, 429 companies with £100m or more in turnover used invoice finance or asset-based lending, up from 405 a year earlier.

In contrast, the balance of lending saw an annual decline for companies with a turnover less than £10m, who may perhaps be more susceptible to economic uncertainty and fluctuations in currency.

Aaron Hughes, managing director of Equiniti Riskfactor, commented: “Invoice finance plays a critical role in giving growing companies’ cashflow and allowing them to re-invest this capital back into their business as quickly as possible. It is therefore unsurprising that it continues to be regarded as the optimal way of funding business growth as the lending is directly linked to, and secured on, their customer’s sales ledger.

“The economic uncertainty and market volatility over the past year has been well documented, but after a little wobble at the start of the year it is promising to see businesses are still prepared to take advantage of this borrowing.

“There is no doubt that the ongoing Brexit negotiations are not helping businesses to plan ahead. Invoice finance is particularly helpful for companies in industries that are being impacted most severely – services, manufacturing, distribution and transport – if the UK can strike a good deal and achieve a degree of certainty there is no reason why we shouldn’t see continued business demand for invoice finance and asset-based lending.”