The Nationwide Building Society announced a big increase in lending in the last year and said it would move into the small and medium-sized enterprise (SME) market.

Nationwide said that ‘in the coming years’ it would develop and offer a full range of financial services to SME so it could play “an increasing role in providing credit to an important part of the UK economy”. The Building Society confirmed the plans as it revealed yesterday a 10 per cent rise in underlying profits to GBP304 million on a 10 per cent rise in underlying income to GBP2.1 billion.

“By doing so we aim to support more needs for more customers and provide a diversified business mix that reduces our reliance on margin income,” said Chief Executive Graham Beale.

Contributed by: BCR Factorscan

Demica’s new research reveals that the aggregated European invoice finance market was estimated to be €1090 billion (£892 billion) in 2011, compared to €991 billion (£811 billion) in 2010 and €844 billion (£690 billion) in 2009. This constitutes a compound annual growth rate of over 10%.

The invoice finance market has therefore become an economically significant source of business finance. It is equivalent to some 8% of EU 27 total GDP, represents more than 8% of EU 27 total corporate lending, and is approximately five times the size of the European leasing market in 2011.

The research aggregated a wide range of third party data, and interviewed respondents from Europe’s top fifty banks, as well as specialist invoice finance providers and invoice finance trade associations. Respondents consistently predicted a sustained growth trend for the total invoice finance market as international and national regulators increase banks’ capital adequacy requirements. Banks are vigorously exploring more efficient ways of providing funding to customers in the light of permanently increased capital adequacy regulation. From the customers’ perspective, invoice finance offers low- or no-rated organisations affordable funding as credit conditions are based on the risk of the outstanding pool of debt. There is a mutual consensus that invoice-based finance is being increasingly employed by banks and corporates as a growing alternative to traditional credit.

Phillip Kerle, Chief Executive Officer of Demica, comments, “As tight conditions persist for traditional lending, invoice finance – in its various forms – has stepped up to the plate to fill the funding gap. We believe that this is the first time that the invoice finance market has been viewed as a whole, and our report has demonstrated its economic significance in Europe, playing a vital role in funding economic recovery at a time when bank credit continues to undergo a substantial “squeeze”. In a world of suppressed liquidity, corporate health hinges on the availability of working capital. This report demonstrates the level of importance now afforded by banks and corporates alike to the various forms of invoice finance technique.”

To receive a copy of Demica’s report “The Hidden Player”, please contact:
Claudia Berndt (claudia.berndt@lindsellmarketing.com) Lindsell Marketing, +44 (0) 207 087 8050

Methodology

A wide variety of public and private sources were consulted and analysed to ‘size’ the European invoice finance market. The geography of this study was strictly limited to the EU 27. Because some invoice-based transactions will remain private, and therefore cannot be incorporated into any analysis, the findings of this report should be taken as a conservative model of the market’s size.

Primary research used to construct this report was conducted with three main groups:-

• Selected European top 50 banks
• European specialist invoice finance providers
• Various European invoice finance trade associations

Third party sources consulted include:-

• Factors Chain International
• BCR Factorscan
• Moody’s
• Standard & Poor’s
• Fitch Ratings
• GE Capital
• Bank of England
• European Central Bank
• European government statistical offices
• World Bank
• International Monetary Fund
• Breedon Report
• European Banking Federation
• The Economist

About Demica

Demica is a market leading specialist in working capital solutions and financial data processing. Established in 1992 and based in London, Demica is 100% owned by the JM Huber Corporation, a diversified, family owned company headquartered in the United States, with operations and staff based globally. Demica works with banks and other financial institutions and intermediaries, corporates, private equity firms and credit insurance companies worldwide. Through its proprietary processing platform Citadel, Demica enables its clients to arrange and execute optimal financing structures based on real-time reporting in multiple currencies, for multiple subsidiaries across multiple jurisdictions.

Demica has been audited and issued with British Standards Institution (BSI) Information Security Management System ISO/IEC 27001:2005 for the provision of working capital solutions, with associated consultancy, advisory and technology services.

For more information about Demica, visit. www.demica.com

The new survey is the first time the ABFA has asked its members to predict industry growth figures for the following year. The survey forecasts that turnover from companies using asset based finance in 2012 will hit £259bn, up 12% from £235bn in 2011.

The popularity of the industry amongst UK and Ireland firms looks set to continue with the number of clients using invoice finance and asset based lending expected to increase by 7% to peak at 44,412.

The ABFA’s members are pessimistic though about the state of the UK’s economy, predicting it will not pick up in 2012, with 92% of members expecting conditions to remain unchanged throughout the whole of this year. A further 5% are even forecasting the economy to worsen in 2012.

Kate Sharp, chief executive of the Asset Based Finance Association, said: “The results underpin the confidence which the industry sees in the popularity of asset based finance. As other forms of finance become harder to secure, the industry is predicting a strong 9% growth rate in total funding as firms look to secure the capital they need. But this confidence clearly doesn’t extend to the wider economy, with members not predicting much more than minimal growth throughout 2012.”

Contributed by: ABFA

Through a secure Escrow service, supported by national accountancy firm, Baker Tilly, Boost Capital receives a fixed percentage of future card transactions, ensuring that payments are made in line with sales performance. Based in Chelmsford, Essex, Boost Capital is the UK arm of Business Financial Services, one of the leading providers of business cash advance in the USA.

David Abbott, UK managing director of Boost Capital, said: “Business cash advance is a relatively new concept in the UK and one that has the potential to become a vital part of the SME funding mix. Its arrival on our shores is in response to the growing demand from businesses, many of which are struggling to access bank funding, for more flexible alternative sources of capital.

“By the end of 2012 we expect to have extended over £10m in funding and be renewing cash advances to merchants who have seen the benefits to their business of using a Business cash advance to grow their market share.”

Boost Capital is the UK’s first universal business cash advance provider, which means that businesses with any card processor can access their products without having the hassle of changing their existing relationship. Businesses that take a high volume of card sales are best suited for this service, including therestaurant, retail, beauty, and hotel sectors.

Marc Glazer, CEO and president of Business Financial Services, said: “While business cash advance is a £1bn a year industry in the USA, the funding source is relatively unknown in the UK with only a handful of providers that are tied to certain banks. Being the first universal provider in the UK is a real landmark for the business, but also a great opportunity to become a key part of the nation’s financial landscape.”

Contributed by: Boost Capital

This development will see Aldermore’s regional office network expand to 9, all of which are dedicated to supporting small and medium sized businesses. The newly designated offices are to be opened in:

• Peterborough – serving the East Midlands
• Bristol – serving the south west
• Twickenham – serving the north and west of London and the M4 corridor.

Aldermore’s accelerated growth over the last two years has driven the requirement to open the new offices,
to ensure localised delivery of service to SME’s in the regions.

Ian Wilkins, Group Managing Director of Commercial Finance, said: “Aldermore is committed to supporting British SMEs throughout the country and we believe it’s important to have regional representation in those areas in which our clients’ businesses are based.

John Dodsworth reports to Managing Director, Damon Walford and will be based in Aldermore’s new Twickenham office. John will be responsible for a team of financial professionals based in Twickenham, Maidstone and Bristol, who will provide small and medium sized businesses with a range of financial services.

John has more than 14 years financial services experience and joins Aldermore from Royal Bank of Scotland Invoice Finance where he was Head of Strategic Development. Whilst at RBSIF, John also held positions as Regional Sales Director for London and the South and as an Associate Director with responsibility for Business Development.

John Dodsworth said: “I’m delighted to be taking responsibility for Aldermore’s invoice finance operation in London and the South. Aldermore has very quickly built an enviable reputation as one of the UK’s most dynamic young banks and I’m looking forward to helping strengthen the bank’s proposition to small and medium sized businesses.
“Aldermore’s new offices will become regional business growth centres and allow us to be closer to our clients and take advantage of the pool of talented people living in those areas. It’s a hugely exciting time! ”

Damon Walford, Managing Director of Aldermore Invoice Finance, said: “John brings with him considerable experience gained in the invoice finance market, which means he’ll be able to make an immediate impact in this important region for Aldermore. I would like to wish John every success for the future.”

Venture has been part of ABN AMRO, the second largest bank in the Netherlands, since 1992.

As part of the change, Venture has unveiled a new corporate identity and a range of commercial banking services via its colleagues at ABN AMRO Bank.

Alongside existing Invoice Finance and Asset Based Lending products, the strengthened link with the ABN AMRO Group means that a range of services will become available to clients including banking services such as cash management, BACs and inter-bank payments and leasing facilities.

As part of the ABN AMRO Commercial Finance Group, the company will continue to serve the growth and operational needs of clients ranging from start-ups to £250m turnover businesses. The rebrand also increases the company’s European reach and cross-border financing opportunities, through the Commercial Finance Group’s operations in the Netherlands, France and Germany.

UK Managing Director, Peter Ewen, says: “This rebrand brings together our ethos of excellent service with ABN AMRO’s commitment to professionalism, ambition and reliability. Our independence from the high street banks also means we can maintain the flexibility of approach for which we’re known.

Ewen comments: “As part of a truly global company, we are now in a stronger position than ever to provide a wider range of services and support our clients’ growth ambitions, both at home and abroad.”

The terms of business, advisors and working practices will remain unchanged for Venture Finance’s clients and business partners, ensuring a smooth transition for all involved.

Luuc Mannaerts, CEO at ABN AMRO Commercial Finance Group, says: “Venture Finance has been a vital part of our commercial finance business since 1992 and we are proud that it’s adopting the ABN AMRO name.

“Venture’s culture of service excellence and wealth of asset based lending experience is important in further developing the asset based lending market in Western Europe. This change also signifies the importance of commercial finance to the whole ABN AMRO group.”

Article contributed ABN AMRO Commercial Finance

Ian Larkin is not typical of most heads of factoring or ABL style operations in the UK in that the majority of his experience was gained in his role as Managing Director of the consumer banking and lending arms of Lloyds TSB. There, he was successful in growing the market share of current account business from nine per cent to 16 per cent. Prior to this he was CFO at Virgin Money, where he successfully expanded the business internationally. Larkin has also had spells as a consultant with McKinsey and Arthur Andersen.

This broad industry experience means that he is able to compare the receivables finance industry with other sectors in the way that service quality, charging structures and agreements are viewed by customers – a skill that some are beginning to think has been lacking in the industry.

Lloyds TSB Commercial Finance is one of the world’s largest factoring and invoice discounting providers with around 10,000 clients. Having taken over the role of Managing Director of the business in August last year, Larkin has had some time to examine the industry and start to formulate his thoughts about the direction he wants to take the funder.

One of the first indications of his views on the state of the industry was displayed at the Asset Based Finance Association’s annual Conference in Brussels last November. At the meeting Larkin took part in a panel session in which the panellists were asked to comment on two particularly frank and for many, eye opening, earlier presentations which provided somewhat surprising results of recent research on the public perception of the industry.

The two research projects, which were commissioned by ABFA and Lloyds TSB Commercial Finance (the latter under Simon Featherstone – Larkin’s predecessor) revealed that although the business community was generally aware of factoring, they were not very familiar with the way the service was structured, levels of finance available and the costs involved. In addition, for many the initial perception was that it was expensive and that there was a significant lack of transparency in the way charges were levied.

Featherstone had already proposed a need for change in the way receivables finance business is conducted when he revealed the initial results of his research at BCR’s 11th Receivables Finance International Conference in Rome in March last year. Here he outlined his view on the importance of creating a distinct brand and delivering high quality services while eliminating confusing product labelling.

Taking this line further, at the ABFA Brussels meeting, Larkin argued that the current economic outlook is not the ideal platform for a return to the growth levels seen in asset based lending for most of the last decade.  Therefore the industry is approaching a threshold where it can change and grow or hold and potentially stagnate.  A significant opportunity exists for providers to actively grow the market through a focused campaign of education, positioning factoring as a core and ‘positive choice’ source of finance. This, he noted, would not only benefit the industry, but also economic growth on the continent – providing SMEs and large corporates with an accepted standalone financing option or a complement to traditional bank funding such as overdrafts and term loans.

According to ABFA statistics, approximately one per cent of UK companies currently use invoice finance. This naturally represents a significant addressable market. The results presented at Brussels noted that the closer businesses came to understanding factoring the less cost was an issue, while Lloyds TSB Commercial Finance’s own independent survey indicates that over 85 per cent of its clients would recommend their products to other companies.

The evidence suggests, then, that users of invoice finance become strong advocates of its products and Larkin feels that by leveraging their success stories effectively – promoting the flexibility and diverse uses of the wider asset based finance product set – the industry can build further on its solid foundations.

Larkin clearly believes that, in order for the industry to reach its full potential, factors and asset based lenders must further demonstrate customer-centricity, work more closely with intermediaries, and continue to develop innovative, added value services and products which provide genuine flexibility against an unpredictable trading backdrop – areas in which his business are making considerable steps.

For many years the question of industry regulation has been debated, and if introduced, some consider that it may help to address these issues.  Larkin is of the opinion that by prioritising client requirements, the industry can, to some extent, self-regulate. Larkin told Factorscan that there was a growing ‘tide of change’. He said the industry ‘could have a lot more clients and that growth could be expected with large major corporates as well as SMEs. As a market leader, Lloyds TSB Commercial Finance is well positioned to surf the tide of change and grow the overall market size’.

He added that this might mean ‘introducing simpler pricing, documentation and terminology, but ultimately greater breadth of product choice, improved client service, higher volumes and greater market penetration’.

Article contributed by Factorscan

For FREE ONLINE ACCESS to the latest World Factoring Yearbook – CLICK HERE

The fall in the UK’s insolvency rate was led by businesses with 101 to 500 employees.  Failure rates amongst these mid-sized businesses fell from 0.21 per cent in December to 0.10 per cent in January.

Experian’s latest Business Insolvency Index also highlighted an improvement in the financial health among businesses – from 83.73 in December to 84.01 in January.

While most business segments experienced comparable insolvency rates to those seen twelve months ago, the insolvency rate of firms with more than 501 employees reached 0.20 per cent in January, up from 0.07 per cent the year before.

Max Firth, UK Managing Director for Experian’s Business Information Services division, said: “The fall in the overall rate of insolvencies has taken it back down to the level it was at a year ago, which is certainly positive.

January generally tends to be a good month, with many businesses benefiting from the Christmas trade.  When coupled with steady improvements in the underlying financial strength of businesses, it means that we can entertain some cautious optimism for the months ahead.

“The latest data has, however, revealed an increase in the rate of insolvencies for the largest firms.  This highlights that despite a positive start to 2012, businesses of all sizes still need to understand the risks they are exposed to and have strategies in place to protect themselves.”

Regional differences
Regionally, firms in Yorkshire led the way with the biggest improvements – from an insolvency rate of 0.15 per cent in December to 0.09 per cent in January.  This was followed by London and the South East, from 0.10 per and 0.11 per cent to 0.05 per cent.

The SME view
The insolvency rate improved marginally among micro businesses (one to two employees), but these businesses have continued to maintain the lowest insolvency rate overall.  They also led the month-on-month increase in financial strength, from 84.74 in December to 85.03 in January.

The year-on-year improvement in financial strength, however, was led by firms with 51 to 100 employees, from 81.62 in January in 2011 to 85.57 in January 2012.  This was followed closely by businesses with 11 to 25 employees followed by 26 to 50 employees – two of the groups that tend to struggle the most.

The UK’s biggest industries
Of the five largest industries in the UK – business services, building/construction, property, IT and leisure/hotels – property saw the biggest fall in its insolvency rate from 0.09 per cent in December to 0.04 per cent in January.  It was also the only one of the big five to see a year-on-year fall – from 0.05 per cent in January 2011.

Businesses within the building/construction sector saw by far the biggest improvements in financial strength – from 77.98 in January 2011 to 82.91.

Article contributed by Experian

]]> http://www.commercialfinancetoday.co.uk/2012/02/29/financial-strength-of-uk-firms-improves/feed/ 0 http://www.commercialfinancetoday.co.uk/2012/02/29/financial-strength-of-uk-firms-improves/ http://feedproxy.google.com/~r/Commercialfinancetoday/~3/P3z7klybOvk/ http://www.commercialfinancetoday.co.uk/2012/02/29/double-digit-growth-for-uk-asset-finance/#comments Wed, 29 Feb 2012 09:08:14 +0000 admin http://www.commercialfinancetoday.co.uk/?p=3560 UK leasing continued an upward trajectory in 2011 with 10% growth in finance deals of up to £20m, according to the latest figures from the Finance & Leasing Association (FLA).

FLA members wrote £19.5bn in sub-£20m asset finance in 2011 with the biggest growth in commercial vehicle finance which grew 22% to £4.4bn compared to 2010.

Other asset classes also experienced growth with business equipment finance up by 15%, plant and machinery finance by 12%, IT equipment finance by 8%, and car finance by 4%. The only sector to drop business was the aircraft, ship and rolling stock category which was down a third to £555m.

Total FLA finance, including deals above the £20m level, was £20.8bn, a 1% increase on the figure for 2010 and represented around a quarter of all fixed capital investment (excluding real property and own-account software) in the UK last year.

The FLA splits big ticket deals from finance written up £20m because a small number of high-value deals can distort annual growth results, either positively or negatively.

The majority of the growth was recorded through the vendor channel, with finance written by equipment vendors increasing 20% year-on-year. Over the same period, finance provided through brokers grew by 16%, and finance provided direct by the lender was up by 4%.

Julian Rose, head of Asset Finance at the FLA, said: “The growth in the use of asset finance in 2011 shows just how important this type of finance is to UK businesses. We saw growth across the board in deals under £20 million.

“Asset finance helps small businesses get the equipment they need to compete in tough trading conditions. It is an affordable alternative source of finance for a huge variety of products and equipment.”

With the exception of finance in excess of £20m, all sectors saw growth month-on-month for December and quarter-on-quarter for the fourth quarter of 2011. The greatest increase over these periods was recorded in IT equipment which grew 55% in December and 28% in the final three months of the year.

Article contributed by Leasing Life

The Group will continue to operate from its offices in Surrey and East Anglia and remains committed to developing and delivering innovative funding solutions to growing businesses. In addition, the FSE Group is increasingly developing its capability, working with a range of public and private sector investors, to deliver new specialist national funds in emerging areas, such as impact investing and local energy production.

Since inception in 2002, The FSE Group has delivered over £30 million of funding to hundreds of small and medium sized enterprises enabling those businesses to deliver their growth objectives and to raise over £100m additional capital. The FSE Group has won a number of awards for its innovative approach to fund development including “Early Stage Investment Team of the Year”.

Going forward, The FSE Group will continue to deliver funding to growth SMEs through a number of SME funds, including the Regional Loan scheme in East Anglia, and through its active business angel network – the FSE Investor Network – and its successful local investment clubs and schemes, such as the Suffolk Investor Club and Incito Ventures.

In line with its CIC status and social ethos, The FSE Group is committed to increasing its presence in the growing social finance sector. In 2011, we launched the Social Impact Co-Investment Fund to enhance the supply of early stage funding to the sector and raise awareness of social investment opportunities in the business angel community. This month The FSE Group will launch the Community Generation Fund, an initiative to provide funding to local communities to develop renewable energy projects. Both funds are national in scale and operated in conjunction with partners who are known and experienced in these fields. Other products are under development for this market.

Similarly, The FSE Group will continue to support businesses through its associated portfolio of services and support:

· Our experienced team can assist businesses to develop their investment case and unlock funding from a range of grant, debt and equity sources.

·  Our recently launched Knowledge Exchange provides access to a wide range of expertise to help businesses to address the challenges faced through the provision of mentors, coaches and non executive directors who have vast experience across a wide range of sectors and interests.

· Our award winning Ready4Equity Academy helps businesses to build their expertise through education on a broad range of entrepreneurial topics, both in the UK and overseas.

Robert Spencer, Chairman of FSE comments “We have been providing innovative funding solutions and other business assistance since 2002. Many hundreds of businesses have benefitted from our support and gone on to great success. Our recent research showed that companies invested in by the FSE Group have grown at seven times the national average proving the impact of our investment strategy. In these difficult times, access to finance remains a key issue and barrier for growth for business and we will continue to play a full part in bridging this gap”

Sally Goodsell, CEO of FSE added “This represents an exciting time for The FSE Group, as we launch as an independent entity. Our track record of success in devising and launching innovative funds over the past 10 years is second to none and we look forward to working a range of partners over the coming months to develop more initiatives.”

 Article contributed by FSE Group