Why More Businesses Don't Use Invoice Finance

Our sizing of the market penetration for invoice finance within the UK suggested that only c.0.86% of UK businesses use factoring or invoice discounting, despite many of the UK's fastest growing

We wanted to find out why the take up was so low therefore we surveyed a randomly selected group of existing invoice finance users and asked them why they thought more UK businesses didn't use invoice finance. These were the responses that they gave:

  • 51% - Too expensive
  • 21% - Lack of promotion/awareness or never heard of it
  • 8% - Used to have/has a negative reputation as a last resort
  • 3% - Banks are giving it a bad name
  • 1% - Should promote collections not funding
  • 1% - Its specialist

Addressing each of these points in turn:

  • Cost Previous research suggested that on average customers thought invoice finance was about 19% over priced, so the the fact that our quote search service can find businesses cost savings on their factoring or invoice discounting, and that we have found clients average savings of 34% on their invoice finance costs shows that there are cheaper deals around. None of our research sample were our own clients.

  • Lack of Awareness/Promotion - This has come up time and time again in our studies as a significant barrier to growth within the invoice finance sector. Several respondents to this survey suggested campaigns to raise awareness of factoring and invoice discounting.

  • Poor Reputation - thankfully, this is now a minority view and in at least one case they specifically stated it was only a historic perception.

  • Promotion of Collections - the concept of promoting the full service i.e. majoring on the credit control/collections was something that was mentioned several times throught this survey. There was a perception raised by some that if invoice finance is compared purely on the basis of funding it could be seen as expensive. However, the view was put forward that if the full range of benefits from the service provided were weighed up the cost would be considered better value.

  • Specialist - invoice finance is not really specialist when you consider that any business that raised credit invoices to other businesses could be eligible. However, this was a view amongst a minority.

Sources: Study of Invoice Finance Users February 2015 and Factoring & Invoice Discounting Market Research Summary 20th July 2011
Note: Some respondents may have given multiple answers to this question.

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Examples of just a few of our finance partners:

leumi abl
bibby
marketinvoice
nucleus
skipton
positivecashflow