- £22.7b balance of advances as of the end of 2018, 2% annual increase
- After two consecutive quarterly dips in H1’18, industry returns to growth
- Larger clients counterbalance shrinking lending to smaller companies
Equiniti Riskfactor, the leading provider of risk management and fraud analytics software for the global commercial finance market, finds that invoice finance and asset-based lending returned to growth in the second half of 2018, through analysis of UK Finance’s industry statistics1.
Total advances at the end of December 2018 totalled £22.7b, up over £100m from the previous quarter and up 2.4% (over £500m) on the previous year. This growth follows two consecutive quarterly declines in the balance of advances in the first half of 2018.
Aaron Hughes, Managing Director of Equiniti Riskfactor, believes the figures demonstrate the durability of the industry and the increasing prominence of borrowing for companies in the services, manufacturing and distribution industries.
“Invoice finance plays a critical role in giving growing companies’ cashflow and allowing them to re-invest this capital back into their business as quickly as possible. It is therefore unsurprising that it continues to be regarded as the optimal way of funding business growth as the lending is directly linked to, and secured on, their customer’s sales ledger.
“The economic uncertainty and market volatility over the past year has been well documented, but after a little wobble at the start of the year it is promising to see businesses are still prepared to take advantage of this borrowing.”
Larger companies, those with an annual turnover of £100m or more, continue to drive borrowing. The balance for invoice finance and asset-based lending for these companies is £7.6b. This accounts for a third of all lending (33%) despite larger companies representing just 1% of borrowers. As of the end of December 2018, 429 companies with £100m or more in turnover used invoice finance or asset-based lending, up from 405 a year earlier.
In contrast, the balance of lending saw an annual decline for companies with a turnover less than £10m, who may perhaps be more susceptible to economic uncertainty and fluctuations in currency.
Looking ahead to 2019, Aaron Hughes believes the market should be set for further expansion especially if the UK manages to leave the EU in an orderly fashion.
“There is no doubt that the ongoing Brexit negotiations are not helping businesses to plan ahead. Invoice finance is particularly helpful for companies in industries that are being impacted most severely – services, manufacturing, distribution and transport – if the UK can strike a good deal and achieve a degree of certainty there is no reason why we shouldn’t see continued business demand for invoice finance and asset-based lending.”
ENDS
For more information:
Temple Bar Advisory
William Barker / Sam Livingstone
Tel: 078 2796 0151 / 077 6965 5437
Email: equiniti@templebaradvisory.com
Notes to Editor:
Research:
1 - Invoice Finance and Asset-Based Lending
About Equiniti
Equiniti Group plc, an international technology-led services and payments specialist, delivering technology-enabled solutions to some of the world’s best-known brands and UK’s largest public-sector organisations.
It is the UK’s leading provider of share registration, employee share plans, and associated investor services, and also has market leading positions in pension administration and software, and employee benefit schemes.
Equiniti’s services, which are delivered by over 5,000 employees, benefit 28 million people in the UK and 120 countries around the world.
Equiniti Riskfactor is the leading provider of risk management and fraud analytics software for the global commercial finance market including factoring organisations, banks and alternative lenders. In the UK, over 90% of the receivables finance market use the leading application, EQ Riskfactor.