Invoice finance borrowing breaks €1bn barrier for first time in 12 months, and is up 22% since the end of 2020.
Demonstrating how vital a role invoice finance has played in supporting Irish firms with working capital during the Covid-19 pandemic, borrowing through invoice finance broke the €1bn barrier for the first time in 12 months.
Just over €1bn of funding provided by invoice finance was utilised by Irish companies at the end of Q3 2021, according to new figures from the Irish Asset and Invoice Finance Association (IAIFA), the body representing the Invoice Finance industry in Ireland.
“These statistics for Q3 2021 highlight a sustained recovery in the Irish economy despite the ongoing challenges that Covid presents to all businesses”
The figure of €1,049m is up 8% on the previous quarter (€971m) and an increase of 22% on the same figure for Q4 2020 (€856m), demonstrating that more and more Irish companies, particularly SMEs, are using invoice finance to fund their increased turnover and growth ambitions.
Sales turnover generated by Irish companies using invoice finance totalled €7.8bn within Q3 of 2021, up 9% when comparing year-on-year performance with the same figure recorded for Q3 2020 (€7.13bn). Quarter-on-quarter performance shows a 3.8% increase on the same figure for Q2 2021 (€7.51bn).
What is invoice finance?
Invoice finance essentially offers businesses immediate access to funds outstanding from their unpaid sales invoices, making income they have already earned, available immediately without having to wait for sales invoices to be paid.
As well as offering businesses the option of using their own funds to improve day to day or seasonal cashflow fluctuations, many companies are now using the facility to finance other growth plans such as investing in infrastructure or equipment, Merger & Acquisition activity, MBO’s and MBI’s, sustainability activity or exploring new markets.
A wide variety of sectors in Ireland utilise Invoice Finance, including Manufacturing, Distribution, Services, Transport, Retail and Construction, indicating the diversity in the types of businesses being supported by Invoice Finance.
Funds available to Irish firms
With the total funds available to Irish companies standing at €2.7bn, there is significant further capacity available from IAIFA members to provide more finance to more Irish businesses in the coming months.
The average number of debtor days outstanding during Q3 2021 stood at 45.6 days, a dip on the same figure for Q2 2021 when the figure recorded was 51.8 days. This is also a significant decrease since the same time period last year when the figure stood at 55.9 days.
“These statistics for Q3 2021 highlight a sustained recovery in the Irish economy despite the ongoing challenges that Covid presents to all businesses,” said David Avery, chair of the IAIFA.
“These statistics for Q3 2021 highlight a sustained recovery in the Irish economy despite the ongoing challenges that Covid presents to all businesses. We are evidencing increased levels of turnover across numerous sectors, supported by greater levels of funding provided by IAIFA members.
“It’s very encouraging to see Irish firms increasingly casting the net more widely to consider a range of financial options that, a number of years ago, they may not have considered. Business owners now understand that invoice and asset-based finance facilities provide an accessible way to improve cashflow, or fund ongoing growth, without taking on additional debt. This increased willingness from businesses to embrace new financial ways of managing cashflow and fund growth will, in the long run, help bring greater financial stability to Ireland’s small and medium-sized firms, and, by extension, the wider economy.”
“We are evidencing increased levels of turnover across numerous sectors, supported by greater levels of funding provided by IAIFA members,” Avery added.