Ian

Demand for Invoice Finance Grows

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Well it is according to a press release sent out to all and sundry by Simply Business. Apparently they are seeing “an increase in small businesses seeking alternative sources of credit such as invoice discounting and factoring as banks refuse to give credit.”

I wonder where they are placing this increase in business as all of the factoring companies that I have been talking to say that new business is flat at the moment whilst the broking community are all looking a bit glum too. Even the ABFA try and put a positive spin on figures that show a constant decline in numbers of SME businesses taking advantage of the various forms of invoice finance.

I have always taken the view that if I have nothing to say, I say nothing – perhaps that’s where I’m going wrong 🙂

Another misleading press release from the ABFA

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Another quarter has passed and right on cue the ABFA have released the latest statistics supplied by their factoring company members along with their usual misleading press release.

The ABFA claim that “UK and Irish firms are increasingly opting for this type of finance over other forms of lending” yet according to their own statistics 48,172 companies used factoring or invoice discounting at the end of 2008 – a figure which has fallen to 41,486 by 30th June 2011

They further claim that “The latest figures also show invoice finance clients are again choosing not to access all of the funds available to them. Total available funds this quarter were £22.2bn, with £6.5bn of finance available but not drawn.”

Nobody who I have spoken to believes that the majority of clients are “choosing not to access all of the funds available to them” but the truth is more likely to be that the figures are rendered completely meaningless by the 496 companies with annual turnovers in excess of £50m who represent 1.2% of clients by number but one third of factored turnover.

The reality is that as far as the SME sector is concerned the factoring companies are pedaling hard to stand still and have been for a few years since the start of the recession

GE Capital acquires Crédit Agricole Commercial Finance UK

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Eurofactor as was has been acquired by GE Capital in an interesting move that should strengthen it’s position as a “big ticket” factoring organization as well as in Europe.

I’ve always had a bit of soft spot for GE as I started out my factoring career at H&H Factors as it was then called more decades ago than I care to remember. It’s had a bit of a chequered history in recent years as it seems that they could never make up their minds where in the market place they wanted to be, having bought Five Arrows Commercial Finance three years ago in order to gain more exposure in the smaller company sector they then proceeded to unload many of their clients, seemingly in a change of mind.

The press release announcing the acquisition of CrĂ©dit Agricole Commercial Finance states “Following the acquisition, GE Capital will have in excess of 500 clients across the UK” which should compared to the press release issued three years ago when they took over Five Arrows which stated “Following the acquisition, GE Commercial Finance, Business Finance will have more than 1,000 customers across the UK.” Seeing as CrĂ©dit Agricole recently claimed to have 258 clients it would seem that GE have lost a huge number of clients in the last three years

Nevertheless this should be an interesting development and I wish them every success

Business Money Dinner

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The annual Business Money Dinner is always a good time to meet up with old friends and make new ones and last night’s do in Birmingham was no exception. The food and comedian were dreadful but they were amply made up for by the eye candy from Warwick University in the next room.

One of the things that I always find interesting is which factoring broker is sitting at which factoring company’s table as it gives a good idea of who is in favour with who and last night there were one or two surprises. Equally surprising was some of the absences as many of the high profile broking outfits were noticeable by their absence.

Many thanks to mine hosts for an excellent and amusing evening

Interesting factoring statistics from the ABFA

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The Asset Based Finance Association (ABFA) has recently released statistics relating to the factoring and invoice discounting market for the first quarter of 2011 which show some growth in the overall marketplace but it’s the accompanying press release that I find most interesting.

Firstly there is the claim that “Invoice finance clients are again choosing not to drawdown all the lending available to them, showing that clients have sufficient funds for their business needs. The total funding available was ÂŁ21.1bn yet only ÂŁ14.8bn was utilised by clients, meaning there were ÂŁ6.3bn of funds still available.”

I am picturing hundreds of factoring clients ringing up their client manager saying “No thanks I don’t need any money this week” I don’t suppose that the truth has anything to do with the many restrictions that the factoring companies impose to make sure that their clients never get anywhere near the notional funding limits.

The second claim that caught my eye was that “The average turnover of clients using invoice finance has increased from this time last year, even though total client numbers have dropped slightly following the recession. The average annual turnover per client a year ago was ÂŁ4.36m, whereas this has grown to ÂŁ5.27m in Q1 2011, a 21% growth in just a year.” A further statistic that wasn’t mentioned but has a huge bearing is that the number of clients with sales in excess of ÂŁ100m per annum has grown from 205 in the quarter ended 31st March 2010 to 220 in the same quarter this year and that extra 15 clients who’s combined turnover will presumably total at least ÂŁ1.5 billion will be enough to render the rest of the statistics completely meaningless.

Alastair Campbell would be justifiably proud of that press release 🙂