Invoice discounting UK – usage trends, industry implications and finding the right funder - Image

Invoice discounting UK – usage trends, industry implications and finding the right funder

Our guide to the latest invoice discounting UK data, which sectors are gaining the most from this popular cashflow solution and the different types of funders operating in this market.

Invoice discounting UK clients

Given the long-running economic fallout of 2009’s devastating global economic recession, not to mention the alleged reluctance of traditional UK banks to lend credit as a result, modern business owners could be forgiven for assuming that enthusiasm for asset-based lending facilities like invoice discounting has therefore waned in recent years. After all, if SMEs and corporations faced an uphill battle securing overdrafts or loans, then what chance would they stand in accessing alternative funding?

Consult the latest official data on invoice discounting UK usage, however, and you’ll soon find that nothing could be further from the truth. In fact, financial services organisation UK Finance revealed in its Q1 2018 report on Invoice Finance and Asset Based Finance Lending that the demand for such invoice discounting facilities grew over the last two years, both in terms of domestic and export invoice discounting products. UK Finance’s members advanced £58,166m of funding to firms via domestic invoice discounting arrangements in January-March this year, a 3% increase on client sales in Q1 2016, while the volume of export invoice discounting client sales noticeably skyrocketed by 25% to £5,791m in the same 24-month window.

This promising trend of escalating fervour for domestic invoice discounting is only further echoed by the report’s findings on the number of business utilising a domestic facility; while the total number of clients has remained firmly above 14,000 since the end of Q1 2017, over 300 further clients joined between March 2016 to March 2018. Viewed collectively, this data provides evidence that any previous doubts among UK businesses considering a domestic invoice discounting facility as can be cast away.

Sector Usage breakdown of Invoice Finance and Asset Based Lending

But does the same ring true for every industry, or are some sectors still proving slow on the uptake? It’s certainly clear from the previously-discussed UK Finance report which types of firms represent the frontrunners for invoice finance / wider asset based lending usage: services and manufacturing firms easily comprised the biggest chunk of UK Finance members’ sales this January-March, each contributing over 10,000 businesses to the membership’s collective client base, followed closely by the distribution sector with 9,242 clients at quarter’s end. Construction, retail and transport firms, in contrast, only accounted for just over 6,000 clients come March 31st, with the lowest-ranking being retail with less than 1000 clients.

Businesses operating in the latter three industries would thus have every right to question the popularity of these products, however after closer scrutiny of UK Finance’s Q1 2018 vs. 2017 data, the greatest surges of client numbers are actually amongst those latter sectors. Between the aforementioned period, the number of transport and construction IF/ABL clients increased by 9.0% and 13.5% respectively, whilst retail marked the most substantial increase of 20.2%. Even in the wake of UK construction’s Carillion crisis and the recent downfalls of high street retail behemoths, then, there’s seemingly no reason why firms operating in those – or indeed any – sector should let such events hamper their strategic confidence.

Comparing invoice discounting funders

If your business wants to join the legions of firms evidently taking advantage of invoice discounting facilities right now, then you’ll need to ascertain the type(s) of funder which offers the most suitable arrangement for your individual commercial situation. Here’s just a brief breakdown of some of the main funder groups and their distinct service features…

  • High street banks – if there’s a familiar brand you’re aware of in the market which you want to choose or stick with, there are some household industry names such as Lloyds Commercial, Santander and Metro Bank who already house their own invoice finance departments.
  • Independent funders – our lender panel consists of some of the largest independent funding providers in the market such as Bibby, Close Invoice Finance and Market Invoice. Generally speaking, some of the independent funders have very established operations, local operating offices as well as offices globally if your invoice discounting arrangement needs to consider export debt customers. Additionally, you can usually expect specialist consultants on particular sectors and products such as construction and confidential invoice discounting.
  • Boutique funders – some industries such as construction, recruitment and retail involve distinct business models or customer groups, hence their need for tailor-made invoice discounting arrangements. Boutique funders can provide sector-focused financing solutions and more account manager support once your facility goes live if that’s what you are after.

Should your firm need its invoice discounting facility to tackle specific operational objectives, there are a multitude of sector-specific, highly experienced financiers with different service features whom can cater specifically to your business requirements.

Find out more

We hope that this guide to the latest UK Finance data specific to invoice discounting and funder service features proves useful in your knowledge and decision making. For further information as to the numerous different ways in which invoice discounting facilities can enable your firm to strengthen its cashflow visit our dedicated product page today.

Apply now and one of our consultants will help to find you the best invoice finance facility for your business, free of charge.

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