Small firms lack awareness of invoice finance, say experts
More work needs to be done to improve awareness among small businesses in Northern Ireland on the benefits of using invoice finance, according to a business advisory company.
Figures from the UK and Irish body, the Asset Based Finance Association (ABFA), have shown that the level of funding by businesses using invoice finance has risen to its highest value since the start of the recession.
The total funding for UK businesses using invoice finance has increased by 9% since last year.
According to ABFA, the level of turnover from British and Irish companies using invoice finance is now at its highest rate, standing at £62.3bn for the third quarter of 2011 - the figures show that firms using invoice finance are experiencing business growth despite the ongoing difficult trading conditions.
Recent independent research carried out by Bibby Financial Services has shown that just 8% of UK business owners applied for a bank loan during the third quarter in 2011 and that the vast majority of those sampled had not applied for any kind of funding.
Nick McCafferty, regional manager for Bibby Financial Services Northern Ireland, said that many firms here are not aware of how invoice finance works.
"While small and medium-sized enterprises (SMEs) are now more than ever open to looking at new ways of doing business, there is still an over-reliance on traditional and arguably outdated solutions such as overdrafts," he said.
"SMEs are hitting a brick wall when attempting to access credit from our banks, this at a time when there are other more flexible finance options available.
"This lack of awareness means that SMEs are missing out on both domestic and overseas business activity and opportunities for growth.
"Invoice finance is beneficial for both start-up and established businesses. As we head into a new year, now is the time for SMEs to explore the alternative funding options available to them."