ABFA figures reveal major growth in factoring across UK

20/05/2013

New figures from the Asset-Based Finance Association (ABFA) have revealed that alternative financing such as factoring, has risen substantially year-on-year.

The research from the industry trade association showed that such financing increased by 16 per cent to £62.5 billion over the last quarter of 2012, when compared to the same time period the year prior.

The sharp rise is due in part to the problems that company owners have had obtaining conventional bank borrowing to support or grow their businesses. The alternative funding mechanism’s growth ran parallel with a £2.4 billion contraction in net lending, as reported by the Bank of England over the same period of time.

Some of the industry sectors making most use of factoring and invoice discounting include recruitment firms and haulage companies, financial experts say. ABFA has confirmed that it believes as many as 250,000 small businesses across the country are currently operating in markets that would be “ideally suited” to invoice discounting and factoring.

Kate Sharp, ABFA’s chief executive, told the Financial Times: “This is not a fully mature market. We believe that there is a fairly large, untapped source of funding need out there”.