The UK’s invoice finance and asset-based lending industry achieved modest growth, despite business uncertainty over the economy, new figures from UK Finance show.
The association’s invoice finance and asset-based lending update shows that advances stood at £22.6 billion at the end of Q3 2018, a rise of 2.4% compared to the same period last year.
Invoice finance accounted for 80% of lending by value, with most clients requiring factoring or invoice discounting.
The number of businesses using invoice finance and asset-based lending remained stable at around 40,400, of which 1,641 companies used asset-based lending in the quarter.
Overall, most clients were in the service, manufacturing or distribution sectors, with an average advance value of around £560,000.
For large businesses with a turnover of more than £100 million, support stood at £7.4 billion, with an average advance value of £17.2 million.
While there was growth overall, demand among small businesses with a turnover of less than £1 million fell.
The amount of finance provided to companies with turnover between £500,000 to £1 million was down 15% year-on-year to £436 million. Demand among companies with a turnover of less than £500,000 fell 5% to £664 million over the same period.
Stephen Pegge, managing director, commercial at UK Finance said: “Asset-based lending continues to show steady growth, driven mainly by advances to larger businesses.
“Support to small and medium-sized companies through invoice finance and asset-based lending is now comparable to total balances drawn on overdrafts.
“However, overall growth has remained modest in line with recent trends across SME lending, as businesses delay investment decisions until the broader economic picture becomes more certain.”
UK Finance is the collective voice for the banking and finance industry, representing more than 250 companies across the industry.
UK invoice finance and asset-based lending
| Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | ||
|---|---|---|---|---|---|---|
| Total advances (end quarter balances, all products) | £m | 22,039 | 22,135 | 21,633 | 21,408 | 22,567 |
| Annual year-on-year growth | 13% | 5% | 4% | -2% | 2% | |
| Invoice finance – advances against debt | £m | 17,384 | 18,031 | 17,344 | 17,052 | 17,905 |
| Invoice finance plus – advances against debt plus other assets | £m | 28 | 29 | 29 | 31 | 30 |
| Total asset based lending | £m | 4.158 | 4.059 | 4.246 | 4.303 | 4,607 |
| Against debt | £m | 2,860 | 2,693 | 2,822 | 2,850 | 3,127 |
| Against stock | £m | 733 | 759 | 893 | 867 | 867 |
| Against plant and machinery | £m | 391 | 450 | 378 | 426 | 442 |
| Against property | £m | 96 | 85 | 86 | 94 | 102 |
| Against other assets | £m | 78 | 72 | 67 | 66 | 69 |
| Other commitment | £m | 19 | 16 | 14 | 22 | 25 |
Source: UK Finance