Latest statistics from the Asset Based Finance Association
- €138m advanced to companies with turnover of between €10m and €25m in Q2 2016, compared to €114m in Q1 2016 – a growth of 21%
- Sales turnover generated by Irish companies using Invoice Finance grew 30% between Q1 and Q2 2016
- Brexit concerns may encourage Irish businesses to diversify credit sources
Companies registering a turnover of between €10m and €25m increased their borrowing through Invoice Finance by 21% during the second quarter of 2016, according to new figures from the Asset Based Finance Association (ABFA), the body representing the Invoice Finance industry in the UK and Ireland.
These larger companies were advanced €138m during Q2 2016, up from €114m on the previous quarter, a growth of 21%, making it the fastest growing size of company in Ireland that utilised Invoice Finance during the period. Even companies with a turnover of over €100m showed a similar trend for Invoice Finance, with €206m in funds advanced, up 6.7% from €193m in the previous quarter.
Invoice Finance is a quick and flexible working capital solution that allows businesses to release the working capital tied up in unpaid invoices. The finance provider will normally purchase the client’s outstanding invoices, providing an immediate initial payment of the majority of the invoice, with the remainder paid to the client on payment by the debtor. As large businesses have so much capital tied up in invoices issued to a wide range of customers, they are ideal for clients for Invoice Finance providers.
The full breakdown of funds advanced for the Q2 of 2016 is below:
Turnover Bands (€M) Amount Advanced Q2 2016(€M) Q1 2016
0.0– 0.5 92 92
0.5 – 1.0 50 66
1.0 – 5.0 309 302
5.0 – 10.0 189 171
10.0 – 25.0 138 114
25.0 – 50.0 158 163
50.0 – 100.0 110 107
Over 100.0 206 193
An average of €1.2bn in Invoice Finance is in use by nearly 2,000 Irish companies at any one time while the total funds agreed reached €3.1bn. This means that there is plenty of funding available for businesses that wish to grow.
Irish companies utilising Invoice Finance saw a significant 30% growth in quarterly sales, growing from €5.6bn in Q1 2016 to €7.4bn in Q2 2016. Year to date sales turnover to June 2016 reached €13.1bn, up 3% on the same period in 2015. This growth in the Irish marketplace demonstrates just how much Invoice Finance can support business during the ongoing economic recovery and support business growth.
The statistics also note that a variety of sectors in Ireland utilise Invoice Finance, including Manufacturing, Construction, Distribution, Services, Transport, and Retail, illustrating the diversity in the types of businesses being supported by Invoice Finance.
Margaret Carrigan, Chairperson of the ABFA Marketing Committee in Ireland, says Invoice Finance is now a truly mainstream finance choice, and one used by a huge number of growing businesses as part of a balanced approach to their funding.
“Invoice Finance is now an established part of the commercial finance market and these figures show that there is an increased appetite from larger Irish businesses to secure funding through this route. More and more Irish companies are now viewing Invoice Finance as one of the primary sources of funding, especially as these businesses seek to diversify their funding sources away from and to prevent over reliance on traditional loans. Continued concerns over a Brexit-related credit crunch in the UK may also increase the need to diversify credit sources still further.
“Whilst the availability of finance from traditional sources was relatively slow to recover from the credit crunch, the Invoice Finance market opened its doors to businesses of all sizes and there remains significant capacity to provide more finance to more Irish businesses.
“As the funding is secured against invoices and other assets, it can be a less risky form of finance for funders to provide. This means big businesses can get even quicker decisions on asset based finance than on other products. This ability to increase the size of your Invoice Finance facility as your business grows is one of the products biggest strengths.”
Full statistical details for Ireland and the UK, along with historical data, is available at:
The Irish Members of the ABFA are:
- AIB Commercial Finance Ltd.
- Bank of Ireland Commercial Finance
- Barclays Bank Invoice Finance
- Bibby Financial Services (Ireland)
- Close Brothers Commercial Finance
- Danske Bank A/S
- Ulster Bank Invoice Finance