Data released this week shows that after a growth of 40% in asset based finance in Qtr 2 this year there is still an additional €800m funding facility available. During the quarter to the end of June 2014, E1.3bn of asset-based finance was advanced to nearly 2,000 Irish businesses. The majority of these clients had annual turnover of between E1m and E5m. As traditional bank lending has become more restricted lenders are increasingly offering financing facilities to businesses against the value of their invoices and other assets to free up cash to invest in growth.
€800m Funding Facility
Asset based finance – particularly invoice finance – is now a realistic alternative to traditional lending for SMEs and is fast becoming a standard part of the finance suite for businesses. Lenders say they still have €800m of facilities that SMEs could be accessing. Having a funding mechanism that can automatically expand with the business growth is a huge bonus and one of the products biggest strengths. This is a huge plus for many businesses, because they don’t have to keep re-evaluating their funding position and proving themselves to their lenders.
Invoice discounting sometimes gets an unfair press but quite often the problems are due to the customer’s failure to adhere to the facility terms and to install proper credit control procedures. With the proper systems & controls this is a vital funding mechanism for many SMEs.
If you need some tips on implementing a good credit control policy and minimising bad debts please feel free to contact me.