As property developers and building companies continue to find bank funding difficult to come by, more and more firms are turning to unpaid invoices as a means to raise finance. 

 

According to the latest research from accountant Wilkins Kennedy, borrowing against unpaid invoices has grown by 17 per cent in 2012 – from 1,629 firms raising financein 2011 in this way to 1,911 this year – reported City AM.

 

The latest Bank of England data confirmed that difficulty to obtain credit from traditional banks has meant that lending to the construction sector has fallen to just £20 billion.

 

Commenting on the findings, Nick Parrett, Head of Property at Wilkins Kennedy, said: “The construction industry has been badly hurt by the reluctance of banks to lend to even the most solvent businesses in this sector”. 

 

He explained that banks had been put off by previous bad experiences so “Construction firms are having to pursue alternative options”.

 

The firm’s invoice financing figures evidenced that since 2007 the uptake of this kind of finance has been growing in popularity, from just 1,160 five years ago to 1,911 today; a 65 per cent increase. 

 

Last year’s business level figures from the National Association of Commercial Finance Brokers (NACFB) further confirm funding for business is hard to access from mainstream lenders but alternative providers are stepping in to improve the situation.

 

The Association’s figures demonstrate that there was an increase of over 4 per cent of overall commercial lending by its 83 lender members. 

 

However, despite this increase – and Wilkins Kennedy’s stats – the Association’s figures show that there was in fact a reduction of invoice finance lending between 2011 and 2012, with a fall of 2.5 per cent year-on-year.

 

NACFB lender members lent the most within the leasing and asset finance sector, which saw a staggering growth of 100 per cent.