Invoice Discounting Leads the Way in Asset Based Finance

The asset based finance industry grew by nine per cent in 2008 and is worth £208bn according to figures from the Asset Based Finance Association (ABFA).

While the majority of advances are against debt, such as sales invoices, advances against stock are on the rise. Over £1.6bn, an increase of 168 per cent on 2007, was advanced to firms in 2008.

The use of export invoice discounting jumped by 34 per cent during 2008, which ABFA said is a result of more businesses looking overseas for new contracts.

Asset based lending (ABL) is a form of financing that allows a business to borrow capital against its property, plant, machinery, stock and debtors. In ABL, lenders can share risk by forming large syndicates, or deals can be completed as a single financier.