18th March, 2010

 

FIRMS ACCESSING MORE FINANCE

Figures released today by the Asset Based Finance Association (ABFA) suggest that firms are potentially over the worst of the recession and are beginning to access more finance from financiers.

  • In the UK, the asset based finance industry advanced £14.1 billion at the end of December 2009 (a drop of just 2% on the previous quarter), against invoices, stock, property and other trading assets worth £29.0 billion (an increase of nearly 8% on the previous quarter)
  • Total clients' sales increased from the previous quarter by 3% to £50.3 billion
  • Average number of debtor days has dropped from the previous quarter, with those for discounting clients down by nearly two days - meaning businesses are waiting fewer days to receive payments
  • Although annual credit protection payments rose to £36.1 million in 2009, the payments dropped to £6.3m in Q4 2009
  • While there was a small decline in overall advances inline with the contracting economy, there was a corresponding growth in asset based lending to large clients
  • Even though credit protection payments have risen by 17% in the past year - in the last quarter they have dropped by 19.2%, indicating that business conditions are not as harsh as they were even last quarter

Kate Sharp, chief executive of the ABFA, said: "Overall the picture is mixed, with many year on year indicators showing a decline, whereas in the last quarter many of them are now showing a small reversal towards positive territory. This landscape is echoed in our members views too, with some showing a marked growth in lending to both SMEs and, in particular, larger companies.

"However, the economy is certainly not 'out of the woods' yet, and with the combination of the General Election, the threat of inflation and the end of quantitative easing, together with the weight of new company tax bills, these corporate lending are likely to continue to reflect the relative health of UK economy. It is encouraging though that our members are still lending over £14 billion in the last quarter alone and that this industry's clients are seeing an increase in their sales, proving that having strong funding routes helps businesses."

ABFA member quotes commenting on the latest stats:

Jeff Longhurst, Credit Agricole Commercial Finance, said: "Although 2009 was a difficult year as good businesses retrenched and required less cash and bad ones struggled to survive, we've done well and increased sales. We did this by sticking to traditionally sound banking principles."

Steve Smith, Hitachi Capital, said: "There are some positive signs within the industry…we've increased balances by 9.7% which is encouraging."

To view the ABFA's Economic Report for Q4 2009 please click here. To view the full report on the statistics for Quarter Four 2009 please click here.