UK businesses lead Europe in asset based finance

Despite relatively strong growth amongst businesses using asset based finance in France and Germany, both lag behind the UK in both the proportion of the economy supported by asset based finance and absolute terms (UK: 15 percent and €189.7bn; France: 11 per cent and €117.7bn; Germany: 7 per cent and €100.5bn).

The ABFA explains that around 80 per cent of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the other 20 per cent represents the fast-growing area of asset based lending, in which businesses can raise funding secured against a range of other assets they own, including inventory, property and machinery.

Jeff Longhurst, Chief Executive of the ABFA, explains:

“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.”

“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 per cent overall - and it has cemented its position as a key alternative source of funding for businesses of all sizes.”