• 16K Invoice Finance Clients Could Be Outside UK Finance.

    Are there 16,000 invoice finance users serviced outside of UK Finance members?Is it possible that there could there be over 16,000 clients that are serviced by invoice finance companies which are not members of UK Finance?

    Here's The Maths

    In my previous post about estimating the number of businesses using invoice finance in the UK, I estimated that in addition to the clients of the UK Finance members, 40,333 at the end of Q2 2019, there may be circa 3,000 clients of providers that don't fall within UK Finance. That estimate may have been low.

    I estimated the total percentage of £1M+ turnover businesses using invoice finance at c. 21%, although research by IGF, involving 500 businesses with turnover in excess of £1M, put the percentage using invoice finance at 27%. The differences could be due to the assumptions I have made, or due to the relatively small sample size within the IGF study.

    I thought it might be interesting to take the IGF figure, and work back the maths to determine how large their figure would make the client book of the non UK Finance members.

    Number Of Invoice Finance Clients Of Non UK Finance Members

    So applying the IGF percentage, 27%, to the total number of UK businesses with turnover in excess of £1M pa (according to my database search), would be 116,371 x 27% = 31,420.

    This would be the expected total of clients of both UK Finance members, and non members.

    According the UK Finance Q2 2019 statistics, their members had 40,333 clients at that time, of which 22,332 had turnover in excess of £1M pa.

    Deducting the two figures would give: 31,420 - 22,332 = 9,088 clients of organisations that are non members of UK Finance.

    Adding The Sub £1M Turnover Clients

    The UK Finance figures for Q2 2019 show 44.6% of clients, by number, having turnover of under £1M pa. Applying that same percentage to the non UK Finance figures, would give rise to a further 7,316 clients, turning over less than £1M pa, that are serviced by non members of UK Finance.

    That would put the total clients, falling outside of UK Finance, at 16,404 - far larger than my original estimate.

    Adding that to the UK Finance clients gives: 16,404 + 40,333 = 56,737 invoice finance users in the UK.- which is just under 1% of all UK businesses (5.7M).

    16K Invoice Finance Companies Outside UK Finance?

    At the time of writing there were 41 ABFA UK Finance members listed on their site, and by my estimate, c. 100 distinct invoice financing organisations within the UK - hence 41% would be UK Finance members, leaving 59% that are not.

    Of the 59 invoice finance companies outside of UK Finance, based on the 16,404 client figure, on average they would have 278 clients each.

    There are likely to be some significant concentrations, as companies like Marketinvoice, who are members of the Peer-to-Peer Finance Association rather than UK Finance, are likely to have significantly larger portfolios than some of the smaller providers that are also non members of UK Finance.

    Conclusion

    The figures of 16K is much bigger than I had expected, and it is all predicated on a sample of 500 businesses interviewed, however the number of clients of non UK Finance members could be significantly larger than previously thought.

    If it is as high as these figure suggest, that would mean that almost 29% of invoice finance clients are serviced by organisations outside of UK Finance.

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