Export Finance Growth Encouraging, Say Invoice Factoring Experts Touch Financial

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Q2 export finance growth reflects the accessibility and flexibility of invoice factoring facilities.

Small UK export businesses will still require finance, and there needs to be greater awareness about practical options like export finance for facilitating small business growth.

The Asset Based Finance Association (ABFA) reported growth in its Q2 2013 release in both export factoring (an increase in 29% from Q2 2012 relative to in Q2 2013) and export invoice discounting (up by 20% in the same period).

“This promising growth in alternative funding reflects the accessibility and flexibility of invoice finance facilities,” says Simon Carter, Director of Touch Financial Invoice Factoring Business Intermediary. “Exports are trickier to finance, given the distances and procedures involved, but invoice finance lenders are closer to the debt. They are lending against sales ledgers, compared with traditional overdraft facilities, which tend to be backed by historical business performance.”

The increase in export finance is accompanied by an overall increase in invoice finance facilities. The ABFA statistics quoted are based on their clients’ sales ledgers. “The increase in sales can only be good for economic recovery,” says Carter, “and more needs to be done to match small businesses with invoice finance facilities, so that they can fund operations leading to sales, and grow.”

This significant increase in funding for export businesses comes amidst a mixed outlook for UK exports in general, with the Office for National Statistics reporting a decrease in exports to non-EU countries by £2.2bn, offset by a slight increase in UK exports within the EU, up to £13bn.

“There are a few reasons why the rise in export finance coincides with this decrease in exports: firstly, that export firms are struggling and require finance; secondly, that firms will see the significant results of the funding at a later date, and third, that the firms that obtained export finance were smaller firms with lower turnovers,” posits Carter.

The government has recognised the potential of UK businesses to cultivate foreign markets and is offering support in the form of the new Direct Lending Scheme, which aims to fund foreign buyers interested in purchasing goods and services from UK exporters. The scheme is providing funding of up to £1.5billion for loans between £5 and £50 million.

“The Direct Lending Scheme sounds like it is more suited towards medium or large companies,” says Carter, “and it is geared towards overseas importers. Small UK export businesses will still require finance, and there needs to be greater awareness about practical options like export finance for facilitating small business growth. The ABFA statistics are promising, but I believe that there is still a large proportion of the market that can benefit from export finance. I wonder if awareness of the alternative working capital solutions for these businesses is really getting through to the businesses which really need it.”

Touch Financial is a business finance intermediary dedicated to helping UK businesses grow.

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Yaser Ayub
@TouchFinancial
since: 02/2011
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