A recent article on insolvencynews.com highlighted the fact that the ABFA, which represents UK and ROI asset based finance companies, said that businesses with t/o of less than £1m had to wait an average of 71 days for payment.
With the Government putting pressure on big business to sign up to its Prompt Payment Code, you would think that payment terms would have improved, particularly as we move out of the recessionary economics that have weighed the economy down since 2008.
ABFA members provide around £17.5 billion of invoice finance to 20,000 UK based small businesses and the trend is growing. Invoice finance is playing an ever increasing role in helping SMEs manage cash flow in the face of the squeeze, often from both their suppliers and customers.
Invoice factoring was introduced into the UK around 40 years ago now, but with high street banks restricting financing to small businesses the trend in invoice finance has skyrocketed as more SME seek to release funds tied up in invoices that are paying paid on longer terms by an increasing number of debtors.