Receivables Finance 2

Gearing Up For Growth

21 July 2021

The receivables finance industry needs to be front and centre in the efforts to achieve a swift and sustainable recovery from COVID-19.

In times of crisis it has always been so – businesses gravitate to the funding sources they can rely on and trust.

To help you get ahead of this trend, EQ Riskfactor has launched the Receivables Finance Global Outlook report series to ensure you have the insights, information, and expertise you need, to deliver to clients and to support the global economic resurgence.

For Volume 1 of our 4-part series we asked global finance leaders in the US, UK, and Europe about the changes in demand that they saw during 2020, their revenue predictions for 2021, and their main strategic priorities moving forward. Here are some of the key findings:

Continued demand

MICHAEL Michael Ellis Managing Director, EQ Riskfactor

“This is mainly due to the receivables finance model which is based on two metrics – the value of a company’s outstanding receivables invoices and the payment history of its clients,” says Michael Ellis, Managing Director, EQ Riskfactor. “As a low risk alterative to the traditional term loan during the pandemic, receivables finance has provided faster access to funds – particularly for small-to-medium sized enterprises (SMEs) with growth potential.”

Following the onset of the pandemic, global leaders noticed a shift in demand for receivables finance facilities. Demand for receivables finance in Europe has continued to increase, with The Netherlands reporting the biggest increase of 68%.

In contrast, industry professionals in the UK reported a 58% decrease in demand for facilities.

Positive predictions

Globally, 81% of global professionals in receivables finance forecast growth in 2021. Of these, 19% predicted significant growth and 62% slight growth, which reflects the confidence of lenders that 2021 will be a turning point in what has been a tumultuous time for many of their clients.

In Europe, predictions were similar – with 60% forecasting growth and 12% predicting a slight decrease. The Netherlands had the most optimistic outlook of our European respondents, with 80% predicting revenue growth and just 4% forecasting a decrease.

Opportunities ahead

“There are fantastic opportunities for invoice finance and asset-based lending,” says Matthew Davies, Head of Asset-based lending, UK Finance. “For growing businesses there are no better finance products. They free up working capital, track the growth of the business, and allow for further expansion. They are the perfect product to support economic recovery.”

Strategic priorities for the future

In our new report, receivables finance leaders revealed their top business priorities moving forward. 38% cite artificial intelligence (AI) and machine learning as a priority and a further 37% prioritise improving the ability to innovate.

“Firms that use innovation to deliver a better customer journey will be able to outpace their competitors, as today’s customers demand a better digital experience,” says Michael Ellis. “Digital customer onboarding is a notable example. Through AI and machine learning, receivables finance professionals can quickly and accurately analyse current data, make future predictions, and speed up the approvals process by comparing prospective onboarding profiles with similar, already-approved applicants.

On balance, the report shows a positive sentiment amongst respondents across the markets studied as the COVID-19 vaccine rollout continues. Coming out of the pandemic, receivables finance offers the perfect vehicle to help economic recovery, as businesses increase their invoicing activity and look for the most conducive financing method to support their future growth.

More about the report

The Receivables Finance Global Outlook Volume 1, 2021, titled Gearing Up for Growth, highlights how the receivables finance industry has adapted since the pandemic, and offers forecasts for future growth. It provides valuable decision points for incumbent lenders and for businesses looking to bridge their funding gap for sustainable future growth in the post-COVID recovery. Each quarter, the report will revisit views, opinions, and analysis as we see how the impact of the pandemic unfolds over the coming months.

Read the full report here

We have detected that you are in United States. We think that Equiniti US would be more suited to deal with your needs.