The problem with factoring:
ABFA CEO, Kate Sharp, on how the industry
is changing
Bailey Kursar, Funding Options
• Part of a team that helps businesses access
a range of lenders with one application
• ICA...
Kate Sharp, CEO of ABFA
• Leads the trade body for invoice finance &
asset based lending industry
• Represents 95% of Asse...
What are the biggest issues facing your business clients?
?
What are the biggest issues facing your business clients?
Poor cash flow
Finding new sales
prospects
Getting finance
Keepi...
What are the biggest issues facing your business clients?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lack of cash Bad deb...
What are the biggest issues facing your business clients?
78%
of accountants said clients have
reported an increase in lat...
What are the biggest issues facing your business clients?
UK businesses are settling outstanding debts on
average...
+25
d...
What are the biggest issues facing your business clients?
80%
stated that the biggest challenge
their clients face today i...
Getting finance for business clients
Getting finance for business clients
 Improves cash flow
 Unlocks cash and grows with turnover
 Maintain healthy client...
Invoice finance: the facts
UK and Ireland
businesses using
invoice and asset
based finance
43,000
of clients have turnovers
under £6,000,000
80% & around one third have
turnovers under £500k
Invoice finance: the facts
total funding advanced to clients
by ABFA members in 2012
£16.7 billion
Invoice finance: the facts
Invoice finance: the facts
 Lender takes control of sales ledger
 Client no longer has burden of credit
control
 Custom...
Invoice finance: the facts
 Credit control managed by the
business
 Generally less expensive than
factoring
 Customers ...
How does
fit in?
How does ABFA fit in?
Asset based finance is not
currently subject to statutory
regulation in the UK or the
Republic of Ir...
How does ABFA fit in?
How does ABFA fit in?
Complaints are handled by the lender
in the first instance
After 12 weeks, or when the lender
issues...
Addressing the assumptions about invoice finance
?
Addressing the assumptions about invoice finance
It’s way too
expensive
Creates rifts between
clients and customers
Too mu...
Addressing the assumptions about invoice finance
It’s way too
expensive
The cost is competitive compared to bank loans and...
Addressing the assumptions about invoice finance
Contracts lock clients
in for too long
For the right business, lenders ar...
Addressing the assumptions about invoice finance
It’s a ‘lender of last
resort’
Lending criteria are more flexible
than ba...
Addressing the assumptions about invoice finance
Too much paperwork
Some products are more suited to businesses with a
ded...
Addressing the assumptions about invoice finance
Creates rifts between
clients and customers
An invoice financier may prov...
A one minute case study
Established in 1996 in Leeds
Boasts 10 top health and supplement brands as part of a
growing portf...
?
www.abfa.org.uk/accountants
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The problem with factoring: ABFA CEO, Kate Sharp, on how the industry is changing

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Do you have strong opinions about invoice finance products?

Many accountants we speak to at Funding Options are wary of invoice finance options. Some have heard horror stories, some have had poor experiences in the past, and some confess that they just don’t know enough about these products to recommend them with confidence.

In this hour-long webinar Kate Sharp of the Asset Based Finance Association (ABFA) joined us to talk through the myths and facts surrounding invoice finance options, and to answer your questions.

Published in: Economy & Finance, Business
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The problem with factoring: ABFA CEO, Kate Sharp, on how the industry is changing

  1. 1. The problem with factoring: ABFA CEO, Kate Sharp, on how the industry is changing
  2. 2. Bailey Kursar, Funding Options • Part of a team that helps businesses access a range of lenders with one application • ICAEW Member Rewards partner • Find out more at www.fundingoptions.com or call 0845 366 4199
  3. 3. Kate Sharp, CEO of ABFA • Leads the trade body for invoice finance & asset based lending industry • Represents 95% of Asset Based Financiers in the UK • Find out more at www.abfa.org.uk/accountants
  4. 4. What are the biggest issues facing your business clients? ?
  5. 5. What are the biggest issues facing your business clients? Poor cash flow Finding new sales prospects Getting finance Keeping clients happy Asking clients to pay on time
  6. 6. What are the biggest issues facing your business clients? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Lack of cash Bad debt Declining sales Poor credit management Source: Financial Marketing Limited, survey of 2,063 accountants
  7. 7. What are the biggest issues facing your business clients? 78% of accountants said clients have reported an increase in late payments in the last 12 months
  8. 8. What are the biggest issues facing your business clients? UK businesses are settling outstanding debts on average... +25 days beyond agreed terms Source: 2012 late payment index from Experian
  9. 9. What are the biggest issues facing your business clients? 80% stated that the biggest challenge their clients face today is the removal or restriction of traditional forms of finance
  10. 10. Getting finance for business clients
  11. 11. Getting finance for business clients  Improves cash flow  Unlocks cash and grows with turnover  Maintain healthy client relationships  Free up resource in the business  Access to specialist experts  Extensive credit history not required
  12. 12. Invoice finance: the facts UK and Ireland businesses using invoice and asset based finance 43,000
  13. 13. of clients have turnovers under £6,000,000 80% & around one third have turnovers under £500k Invoice finance: the facts
  14. 14. total funding advanced to clients by ABFA members in 2012 £16.7 billion Invoice finance: the facts
  15. 15. Invoice finance: the facts  Lender takes control of sales ledger  Client no longer has burden of credit control  Customers will be aware of the facility  A readily available form of finance
  16. 16. Invoice finance: the facts  Credit control managed by the business  Generally less expensive than factoring  Customers may not need to know about the finance facility  A trust account is set up so that money can be transferred between the business and the lender
  17. 17. How does fit in?
  18. 18. How does ABFA fit in? Asset based finance is not currently subject to statutory regulation in the UK or the Republic of Ireland A self-regulatory framework, introduced by ABFA, covers their members
  19. 19. How does ABFA fit in?
  20. 20. How does ABFA fit in? Complaints are handled by the lender in the first instance After 12 weeks, or when the lender issues a „Deadlock‟ letter, the complainant can then register the complaint with ABFA ABFA has commissioned the Ombudsman Service to provide the independent complaints process for the industry
  21. 21. Addressing the assumptions about invoice finance ?
  22. 22. Addressing the assumptions about invoice finance It’s way too expensive Creates rifts between clients and customers Too much paperwork Contracts lock clients in for too long It’s a ‘lender of last resort’
  23. 23. Addressing the assumptions about invoice finance It’s way too expensive The cost is competitive compared to bank loans and other products Businesses using invoice finance benefit from savings on costly overheads, such as a credit control team Better cash flow results in fewer bank charges
  24. 24. Addressing the assumptions about invoice finance Contracts lock clients in for too long For the right business, lenders are willing to be more flexible There are more and more products coming onto the market, all with different terms
  25. 25. Addressing the assumptions about invoice finance It’s a ‘lender of last resort’ Lending criteria are more flexible than bank loans Invoice finance is designed for growing businesses, not those in trouble
  26. 26. Addressing the assumptions about invoice finance Too much paperwork Some products are more suited to businesses with a dedicated finance manager Some lenders now manage accounts online and make reports on client sales ledgers available
  27. 27. Addressing the assumptions about invoice finance Creates rifts between clients and customers An invoice financier may provide a dedicated credit controller who effectively becomes part of your team Some invoice discounting products remain confidential, so customers aren‟t even aware of the facility
  28. 28. A one minute case study Established in 1996 in Leeds Boasts 10 top health and supplement brands as part of a growing portfolio Recommended by their accountant, invoice finance has meant they can pursue an international growth strategy. Their substantial facility finances their UK invoicing and their export debt. “We have been delighted with the flexibility that invoice discounting provides” (Philip Bryne, MD) BR Pharmaceuticals
  29. 29. ?
  30. 30. www.abfa.org.uk/accountants

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