ABFA

Demand for Invoice Finance Grows

by

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

by

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

Interesting factoring statistics from the ABFA

by

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 £21.1bn yet only £14.8bn was utilised by clients, meaning there were £6.3bn 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 £4.36m, whereas this has grown to £5.27m 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 £100m 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 £1.5 billion will be enough to render the rest of the statistics completely meaningless.

Alastair Campbell would be justifiably proud of that press release 🙂

Factoring statistics for 2009

by

Apologies for not updating the blog recently which was in part due to an extended vacation thanks to yet another misfortune emanating from Iceland plus the fact that there doesn’t seem to be anything of interest happening in the factoring world.

The final quarter’s stats for 2009 were recently published by the ABFA and the figures for all of 2009 make quite depressing reading with overall client numbers down by 10% but it’s when one starts to look carefully at individual statistics that it starts to get worrying.

The largest number of clients overall is in the 0 to £500,000 turnover category with 38% of all clients falling within this grouping. The number of clients in this group fell by 11% over the year but the worrying statistic is that overall advances to this group fell by a whopping 56.8% from £908m to £567m

At the end of 2008 the ABFA reported a total of 48,022 companies with either factoring or invoice discounting facilities and whilst this number fell to 43,590 by the end of 2009 the factoring companies that provided the statistics reported that they had lost 20,892 clients throughout the year and gained 15,100

20,892 lost clients is an extremely large percentage of the average number of clients overall and should give cause for concern to observers.

Barclays seem to be the biggest loser as their client numbers went from 4,967 at the end of 2008 to 3,723 at the end of 2009 which is a reduction of 25%

Cattles Invoice Finance sale announced at long last

by

The long running saga of the sale of Cattles Invoice Finance has at last been announced with the purchasor being the private equity house AnaCap Financial Partners LLP who have been lurking in the wings for quite a while.

Whilst the announcement is now “old news” it did come when I was away sunning myself in Cyprus and whilst I thought about writing something for the blog at the time the amount of effort required to research and write something via Blackberry was too much like hard work.

Having belatedly read the press release dated 10th August I was interested to read the comment attributed to Doug Crawford that “The invoice finance industry is enjoying unprecedented growth in the current financial climate………”

The statistics for the factoring industry issued by the ABFA for the last couple of quarters show that far from enjoying “unprecedented growth” the industry has seen a drop in value of sales factored as well as the number of clients availing themselves of the services but I now await with great interest the figures for the quarter ended 30th June (which should be available shortly) to see the official confirmation of this growth.