- 09 Dec
Why Companies Don't Know About Invoice Finance
I have had an interesting point raised, about the #IFaware campaign, and the research that led to it's inception.
My Opinion About The Reasons For Low Awareness Levels
My opinion about the reasons for the low awareness levels included a couple of aspects. Firstly, our previous research suggests that very few businesses have seen any invoice finance advertising at all, 14% of existing users (who should be highly attuned to noticing it) versus 90% (of IF users!) in the case of crowdfunding.
So the irony is that the existing users of accounts receivable financing had seen 6.5 times more advertising for crowdfunding, than for the product that they were using already. You may argue that as existing users of IF they may not be a target audience for marketeers, however I would counter that by mentioning the bit of gossip we heard recently suggesting that clients of First Capital Factors (who recently went into administration - with Leumi ABL seeking to maintain funding for all their clients) had received up to 35 marketing calls, over the course of a few days, from discount factors and brokers seeking to offer them alternative facilities. This, I would argue, suggests exisiting users are as much a target audience as non users.
Direct Marketing Methods
Furthermore, in other research that we have conducted, those that had seen invoice finance related advertising said that 84% of it was email based - so a very direct form of marketing, with very low impact, as much of it is ignored as spam.
Marketing Approach Theory
When you consider that less than 1% of UK businesses use invoice finance, I suspect this leads most marketeers within our sector, to pursue highly targeted, direct marketing campaigns, rather than general awareness advertising and promotions. When you are searching for the 44,000 existing users, or others like them, marketing approach theory would imply that TV ads to millions are not going to be the most economic strategy.
Industry Body For The Promotion Of Invoice Finance
There is no industry body for the promotion of invoice finance, working on the awareness problem, with cooperation between the various providers - and I am not sure how would individual providers view funding such an effort? Especially, in the light of my comments in the previous paragraph.
Having said this, I feel there would be much merit in such a body and I am sure that some clever marketing and promotion could a lot with a relatively modest budget.
When you put all these influences together I suspect they lead to the low levels of awareness that we have measured - I would welcome the opinions of others.
The shame of the current situation is that 98% of existing receivables financing users told us that they would recommend these products to others, and you can qualify for factoring even if you have poor credit history. Despite this, 31% of new startups and 59% of fast growth companies, were unable to raise enough funding.