THE UK’S invoice finance and asset-based lending sector returned to growth in the second half of 2018, research has found.
Total advances at the end of December 2018 totalled £22.7bn, according to UK Finance data analysed by risk management software provider Equiniti Riskfactor.
This is an increase of more than £100m from the previous quarter and a 2.4 per cent rise on the previous year.
This growth follows two consecutive quarterly declines in the first half of 2018.
Read more: Invoice finance: The business lifeline
Larger firms, with an annual turnover of £100m of more, continue to drive borrowing, Equiniti Riskfactor said.
These larger firms borrowed £7.6bn in the form of invoice finance and asset-based lending last year – accounting for around a third of the market.
In contrast, smaller firms – those with a turnover of less then £10m – reduced their borrowing over the same period.
“Invoice finance plays a critical role in giving growing companies’ cashflow and allowing them to re-invest this capital back into their business as quickly as possible,” said Aaron Hughes, managing director of Equiniti Riskfactor.
“It is therefore unsurprising that it continues to be regarded as the optimal way of funding business growth as the lending is directly linked to, and secured on, their customer’s sales ledger.
“The economic uncertainty and market volatility over the past year has been well documented, but after a little wobble at the start of the year it is promising to see businesses are still prepared to take advantage of this borrowing.”