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Growth through asset based finance
In addition to its more direct interventions aimed at increasing the supply of finance to smaller businesses in the UK, one of the most important ‘soft’ roles that the British Business Bank is playing is increasing awareness and understanding of the full range of finance options available.
The information gap is as much an issue for the rapidly evolving technology focused finance providers as it is for more established types of finance that have not always been as understood as well as they should be.
The invoice finance and asset based lending industry, as represented by the Asset Based Finance Association (ABFA)*, welcomes the work being done to increase awareness and understanding of what different types of finance are available, when they can be appropriate (and when they might not be) and where they can be found.
ABFA Members include banks as well as specialist non-bank providers and it is the diversity of the industry that sets it apart. We also believe that it is a challenger industry – at any one time ABFA members will be advancing well over £20bn to more than 40,000 UK businesses. However they could provide more funding to more businesses – and getting better information out there is key to achieving this.
Research findings are clear
Studies carried out by the British Business Bank and others repeatedly conclude that access to working capital is one of the main challenges for UK smaller businesses. Helping British businesses of all sizes and in a wide range of sectors with their working capital requirements is what our industry has done for 40 years.
If a business provides goods or services on credit terms to other businesses or public bodies, it is highly likely that an ABFA member will be able to help them unlock the potential working capital tied up in their unpaid invoices and other assets, allowing them to focus on growing the business.
New Guide now available
Following up on the publishing of the Business Finance Guide, the ABFA has collaborated with the ICAEW’s Corporate Finance Faculty to produce an independent detailed guide to the industry and its products and services, specifically designed for accountants and other key advisors: Growth through asset based finance.
ABFA Members are covered by an independent Standards Framework, which includes a Code setting the standards that potential clients can expect from ABFA Members, as well as an independent Complaints Process and an independent Professional Standards Council. This has been designed to ensure that businesses can use asset based finance with confidence.
There will undoubtedly be choppy waters ahead for the UK economy, but the invoice finance and asset based lending industry has supported UK businesses through thick and thin and is ready and able to provide more finance, to support more businesses in future.
This is a guest post created for the Business Finance Guide by Matthew Davies
Matthew Davies, Director of Communication and Government Affairs, UK Finance
*In July 2017 ABFA was integrated into a new trade association, UK Finance.
Further information and an explanatory video about invoice finance and asset based lending is included in the Business Finance Guide, and more detailed information in the CFF best-practice guideline Growth through asset based finance.