- €28.6bn is one of the highest annual sales turnover figures registered by the IAIFA and demonstrates how vital Invoice Finance is in supporting Irish firms with working capital
- Debtor days now stand at 56.3 days – down from 62.5 days two years ago
Sales turnover generated by just over 1,600 Irish companies using Invoice Finance reached €28.6bn in 2019, according to new figures released by the Irish Asset and Invoice Finance Association (IAIFA), the body representing the Invoice Finance industry in Ireland.
This is one of the highest annual sales turnover figures registered for Irish companies using Invoice Finance since statistics for Ireland were first collated by the organisation in 2002. The IAIFA research shows that in just five years, this figure has grown by 10% (€25.9bn in 2015 to €28.6bn in 2019), demonstrating just how much Invoice Finance is continuing to support Irish firms with vital working capital to fund their business.
An average of €1.46bn in Invoice Finance was in use by Irish companies at any one time during 2019. With the funds available to Irish companies standing at €2.7bn, this shows that there is significant capacity available from IAIFA members to provide more finance to more Irish businesses in the coming months.
The average number of debtor days outstanding during the final quarter of 2019 stood at 56.3 days. While this is higher than the same figure for Q4 2018 (53.8 days), the IAIFA statistics show that it is down substantially since the same time period two years ago (62.5 days in 2017)
A wide variety of sectors in Ireland utilise Invoice Finance, including Manufacturing, Distribution, Services, Transport, Retail and Construction, indicating the diversity in the types of businesses being supported by Invoice Finance.
David Avery, Chairperson of the IAIFA and Head of AIB Commercial Finance Limited says Invoice Finance is now an established alternative to traditional lending products for businesses looking to fund their growth, and today’s figures show that the appetite for Invoice Finance remains very strong.
“The 2019 figures highlight an increased level of sales from Irish SME’s, across multiple sectors, that benefited from innovative invoice and asset-based lending solutions, and helped to underpin the strong performance of the Irish economy in 2019. Of course, much has changed in the last two months due to the outbreak of Covid-19 and the resultant restrictions that have made an immediate impact on the global economy and on our personal lives.”
“The members of IAIFA are committed to supporting their customers through this challenging period and have adapted quickly to ensure operationally they continue to provide finance and support, whilst adhering to the social distancing measures introduced. IAFIA fully recognises the importance of supporting Irish SME’s and the employment they provide, and our members remain closely engaged to their customers tailoring financial support to individual customers. Whilst the average debtor days was down in 2019, we are already witnessing this increasingly and therefore I fully expect that IAIFA will provide vital access to working capital as sectors, currently most impacted by Covid-19, begin to re-open.”
Formerly known as Asset Based Finance Association (ABFA), the industry body was recently re-named as the Irish Asset and Invoice Finance Association (IAIFA) and members include high street banks and a number of independent specialist finance providers.
The organisation provides a collective voice for the industry, promoting the wider benefits of invoice and asset based lending solutions and ensuring that appropriate standards are upheld across all members. The organisation is also a source of information for those wanting to know more about the industry’s products and services.
The current members of the IAIFA are:
- AIB Commercial Finance Ltd.
- Bank of Ireland Commercial Finance
- Bibby Financial Services (Ireland)
- Close Brothers Commercial Finance
- Grenke Finance Plc
- Ulster Bank Invoice Finance
For further details, please contact:
Breda Brown / Sarah Doyle
Tel: (01) 522 5200 or (087) 2487120 (BB)
There are two basic types of asset-based finance:
- Invoice Finance: The two main types of Invoice Finance are invoice discounting and factoring. Both allow businesses to release the working capital tied up in their debtor books. In both, the finance provider will normally purchase the client’s outstanding invoices, providing an immediate initial payment of the majority of the invoice, with the remainder (less the financier’s fees) paid to the client on payment by the debtor. Factoring incorporates an added service element, with the financier normally managing the credit control and collections process. This makes it particularly suitable for smaller businesses. In an invoice discounting facility, the client continues to manage its own credit control. The majority of the funding currently provided by the industry in the UK and Ireland is through Invoice Finance facilities.
- Asset Based Lending: An asset-based lending facility will provide a broader mix of funding including revolving and amortising structures against the entire range of business assets. Traditionally advances are available against invoices, inventory, property, plant and machinery, but can be arranged against intangible assets such as brands and forward income streams.