Small firms and large corporations, alike, are increasingly turning to invoice financing to meet their funding needs, and manufacturers are leading the way, according to new data.
Quarter one figures released by the FDA (formerly known as the Factors and Discounters Association) show that some 44,000 companies used invoice financing in the first three months of this year, while the total funds advanced exceeded £11bn.
By the end of this year, the FDA said it forecasts the invoice finance industry to be worth a staggering £158bn, a £10bn increase over last year.
Of the 44,000 companies, 47% chose factoring and 37% sought invoice discounting, while manufacturing remained the largest industry to use invoice financing.
Some 33% of factories named it as their funding method of choice, followed by the service sector at 29% and distribution at 20%.
The FDA also noted a 7% growth in the use of invoice finance by clients with a turnover between £0 and £500,000, which it said signals a sharp increase in start-up businesses.
The FDA also analysed the use of invoice finance by the retail and construction industries – two sectors not traditionally associated with the product – for the first time since the introduction of the industry statistics.
“We decided to analyse the use of invoice finance by the retail and construction industries as a growing number of our members are providing funding to companies within these sectors,” said Kate Sharp, chief executive of the FDA.
“While the figures are relatively small in comparison to the more established users, like manufacturing, it shows a growing demand for invoice finance.”
