Global factoring on the up as firms seek cash relief

17/06/2013

The number of businesses that are now making use of factoring finance has risen substantially, according to new research.

Reporting on a trend which looks set to go global, international debtor finance firm Bibby Financial Services, reported that the number of Australian-based organisations using the tool has increased to its highest level in five years.

Highlighting the growing popularity of debtor financing, the report – which used data from the Debtor and Invoice Finance Association (DIFA) – showed that total debtor financing turnover in the first quarter of this year in the country was 2013 quarter was around £8 billion. This figure was made up of amounts spent on factoring and invoice discounting.

Total debtor finance turnover between March 2012 and March of this year rose by 2.1 per cent, showing solid growth when compared to the overall growth of business credit. The DIFA figures also revealed that factoring client numbers rose to 1646 in the first quarter of this year, showing the highest level since March of 2008.

Gary Green, National Sales Director at Bibby Financial Services told Scoop: “Small and medium-sized businesses (SME) are facing a challenging cash-flow environment and they are looking at innovative ways to manage their cash flows such as debtor finance because they aren’t getting the funding support from the banks that SMEs have traditionally relied upon in the past.

“Debtor finance is ideal for SMEs because it allows them to quickly convert unpaid invoices into cash. Businesses can leverage their accounts’ receivables, which is typically one of the largest assets on a business’s balance sheet,” Mr Green went on to say.