Irish businesses are increasingly turning to bill financing to finance their growth, with nearly â¬ 1 billion advanced mid-year by non-bank lenders extending credit based on customer orders .
irms used 971 million euros of financing in the second quarter, up from 856 million euros at the end of the fourth quarter of 2020, an increase of 13%, according to the latest figures from the Irish Asset and Invoice Finance Association (IAIFA ).
The industry group said the rise showed more Irish businesses, especially SMEs, were using invoice financing to fund higher turnover and growth following the easing of restrictions. of Covid.
âOur latest figures highlight a significant increase in the sales level of Irish SMEs, across several industries, which have benefited from innovative asset-based invoicing and lending solutions over the past few months,â said David Avery, chairman of the ‘IAIFA.
âNot surprisingly, given the times we’ve just been through, many business owners don’t want to take on more debt in order to fund cash flow or growth plans. As a result, many now choose to use invoice financing solutions, which are a debt-free financing option. “
Invoice Funding helps businesses free up unpaid working capital from unpaid sales invoices, allowing them to earn revenue before they receive it from their customers. Many companies use the facility to invest in infrastructure or equipment, as well as to fund M&A, management buy-out and buy-in activities.
Revenue from Irish businesses using invoice financing was â¬ 7.5 billion in the second quarter, up 18% from the same period in 2020 and up 15% from in the first trimester, according to the IAIFA.
The IAIFA said that â¬ 2.7 billion in funding is currently available through its members, which include the commercial finance branches of traditional banks as well as non-bank lenders.
Alternative financing options for businesses are now becoming more common, with more turning to asset-backed or peer-to-peer lending in recent years.
Traditional bank lending to businesses has been on the decline for a decade as clients of SMEs have paid off debt and banks have tried to shrink their balance sheets to become less risky and more capital efficient.