The rise in the level of support being given by the asset-based finance industry continues to put the banks to shame.

According to the Asset Based Finance Association (ABFA) in the three months to the quarter ended June 2014 asset-based funders (comprising of invoice finance and asset finance providers) lent out a record £18.9 billion to UK businesses.

The figures from the ABFA reveal that the combined amount of invoice finance and asset based lending provided to businesses grew by 7% in the last quarter, from £17.7 billion in March 2014, and 10% in the last year, from £17.3 billion in June 2013.

The ABFA puts the growth down to constraints on traditional lending as well as greater awareness and understanding amongst businesses as to how borrowing against the value of their invoices and other assets can free up cash to invest in growth.

The ABFA reported that 80% of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the remaining 20% represents asset based lending, in which businesses can raise money secured against a range of other assets they own, including inventory, property and machinery.

Compared to the average fall in bank lending of 3% to 4% per year it’s clear that whilst many businesses may be forced to consider alternative sources of finance the fact that funding sources are now more diverse can only be a positive move.

With the economy beginning to pick there is one barrier to growth that many business owners don’t see until it’s too late and that is lack of cash to fund future growth. Two recent surveys have highlighted the recurring problems UK businesses have when it comes to late payment.

The first survey from Close Brothers reveals that of those businesses experiencing problems due to late payments, 58% said that it impacts on their day-to-day cash flow management with 17% saying it has resulted in them reining in necessary spending. A further 15% say it threatens their ability to trade.

The impact of late payment is not just on poor cashflow but also in terms of the time taken out of the working day to chase up outstanding debts. Close Bros found that 17% of businesses spend more than 10 hours a month chasing late payers.

Despite chasing for payment it can often happen that the debt remains unpaid and findings from Satagom an automated credit control firm have revealed that 40%of firms have written debts off in the past.

As discussed in previous blogs part of the solution the late payment is to ensure there is a system and process in place for chasing bad debts. The Satago survey found that 77% of firms don’t have a person or a procedure in place so making the chasing of late payments even more difficult.

If your growth plans are held back by poor cashflow there are a number of solutions including invoice discounting, factoring, and spot finance which are detailed here – Cashflow Solutions.

Also here is a chat Rob Warlow had with Steve White of Thornbury Collections on steps you can take to avoid late payment.

In the latest episode of the Business Finance Bulletin Rob Warlow examines an issue that keeps many small business owners awake at night… late payment and poor cashflow. Rob looks at a recent survey which reveals how painful the task of chasing late payers can be.

One way to solve cashflow problems is to unlock the cash trapped in a business and Rob shares a relatively new financial solution to this problem which is spot financing.

And in the Business Finance Tip of the Week, a clip from a live seminar Rob delivered at a Kevin Green property and wealth creation weekend hosted in Amsterdam. In this clip Rob talks about raising growth capital via selling equity and how it can benefit a business.

This week’s Friday Business Finance Bulletin is out and I look at the new rules being introduced by the Financial Conduct Authority to regulate the crowdfunding and peer-to-peer lending sector.

Also I take a look at the launch of a new one-stop information site for alternative sources of finance speared-headed by Funding Circle, Zopa, MarketInvoice, Platform Black, Seedrs and Crowdcube.

There’s news from the OFT on its interim report into the SME finance market and I look at a survey from Lloyds Bank on cashflow and invoicing.

In the Finance Tip of the Week, following a session with a team of bank managers I share three key things which bankers say hold them back from giving a ‘yes’ to a business finance request.

Posted on 03.12.2013, by Rob Warlow

When dealing with clients looking to raise finance or in the seminars we run it’s surprising how many business owners are only just beginning to realise that Asset Based Finance is a growing source of alternative finance.

The sector supports growth by financing asset purchases via leasing, hire purchase and unlocking cash through invoice discounting and factoring.

The latest figures for the three months to September 2013 from the Asset Based Finance Association (ABFA) have shown that the industry and its clients are continuing to perform strongly.

At the end of September members of the ABFA had total advances out to its clients of £17.4 bn, which is 6% up on the same period in 2012 (£16.4 bn). This is only the fifth time the funding balance has been above £17 bn and this demonstrates that the demand for asset based finance is strong and growing with firms increasingly using it to fund growth and their working capital requirements.

This growth contrasts with that of the wider finance market where bank lending continues to contract at the rate of approximately 3% per annum.

ABFA has also looked at how those businesses using asset based finance have performed; total sales from those businesses broke £71 bn for the third quarter, the strongest ever quarterly performance. This is up by some 14% on the same period last year.

There is a myth that asset based finance is more for larger businesses but the industry does support smaller businesses, with almost 15,000 of the over 43,000 clients being found in the £0 – 0.5 m turnover bracket, and over 30,000 in the sub £5 m bracket.

In terms of sectors they support, asset based financiers are most active in the services (30%), manufacturing (29%), distribution (24%), transport (7%) and construction (5%) sector.

If you are planning for growth check out how asset based finance can support your plans… it’s all about diversifying your funding sources.

Check out the video below on how buying assets via an asset finance facility can work for you.

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