Exporters Using Asset Based Lending

The number of small and medium-sized businesses (SMEs) achieving success by trading overseas has doubled during the fourth quarter of 2011 to one in five, according to a recent study conducted by invoice finance specialist Bibby Financial Services.

For businesses which turnover between £5 and £20million per year the figure rises to nearly half, with 47 per cent of business owners in this bracket saying this is proving effective in boosting their firms’ growth.

Last month, statistics from the Asset-based Finance Association (ABFA) showed export factoring, a funding and collections service

designed specifically for businesses involved in exporting who want to release cash tied up in outstanding invoices, had risen by more than a third (38 per cent) in Q3 2011 compared with last year, helping fuel an increase in the number of SME exporters.

The study is released nearly a year after the launch of the Enterprise Finance Guarantee scheme by business secretary Vince Cable in February 2011. Promoted as a central pillar of the Government’s trade strategy, it has been widely reported that the initiative, which offers loan guarantees for small exporters struggling to get financing from banks, has had poor pick up from the SME community with just a

handful of firms applying for funding since its inception.

Mark Riches, head of international trade finance at Bibby Financial Services, says: “The types of SME businesses that appear to be benefitting most from overseas trade opportunities at present appear to be medium-sized finance and business services firms, with our study showing more than a third of business owners in these sectors looking overseas to combat the downturn.

“However, more support could still be given at the lower end of the scale – for businesses that turnover less than £5million, for example, our study shows there are nearly a third fewer firms benefiting from doing business overseas. In particular, the businesses struggling to make any head way of late appears to be smaller manufacturers and construction firms; where around just 10 per cent are able to boost their revenue through overseas business.“In this respect, we feel the invoice finance industry has an important role to play in continuing to raise awareness of its offerings such as export factoring in order to help smaller firms’ ambitions of doing business overseas, and in turn achieve the much talked about export-led economic recovery.”

Posted in Bibby Financial Services updates by Julia Legge on 05 January 2012.

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