Government to get involved in invoice discounting ?

According to an article in the Financial Times yesterday the Government is supposedly looking at the possibilities of getting involved in invoice discounting in the hope of boosting the supply of credit and working capital to the hard hit SME sector.

 

It would seem that the favoured method would be for the Government to extend it’s guarantee facility to cover invoice discounting facilities from the major banks and apparently the Asset Based Finance Association (ABFA) have been involved in these discussions.

 

Banks have been shoving many of their customers down the factoring and invoice discounting route for several years as not only are the rewards higher but the security is better as invoice discounting is fully secured by the invoices that are being funded and a properly managed invoice discounting company shouldn’t need a Government guarantee to enable them to offer funding facilities.

 

If this turns out to be true it will be an unusual step by the ABFA to lobby for guarantees that will only be of use to some of their members but which will give them a huge advantage over the others.

 

Watch this space

2 thoughts on “Government to get involved in invoice discounting ?

  1. If the government are getting their view of invoice finance from the Financial Times then we may as well all call it a day. Likewise FT articles reflect poorly on ABFA who presumably provide statistics & contribute content. Any business looking at the FT’s article on invoice finance dated dec 30th 2008 would run a long way before even discusiing such a facility. Look at the Ft’s site, search invoice discounting

  2. “experts have warned that the practice is an expensive alternative to traditional credit insurance. One senior insurance broker said: “This is one step away from hammering on the door of your debtors with the bailiffs.”

    The above is one particularly daft quote from the 30th December article in the FT and it’s a petty that such a prestigious newspaper as the FT has to resort to “rent a quote” and then go to print without even checking to see if the “expert” knew what he was talking about, which in this instance he patently didn’t.

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