Irish companies using invoice finance registered sales turnover of €7.5bn in Q2, up 18pc on same figure for Q2 2020.
An estimated €971m of invoice finance funding was utilised by Irish companies at the end of Q2 2021, according to the Irish Asset and Invoice Finance Association (IAIFA).
IAIFA, the body representing the invoice finance industry in Ireland, reported that sales turnover generated by Irish companies using Invoice Finance totalled €7.5bn within Q2 of 2021, up 18pc when comparing performance with Q2 of 2020.
“Our latest figures highlight a significantly increased level of sales from Irish SMEs, across multiple sectors, that have benefited from innovative invoice and asset-based lending solutions over the past few months”
The figure of €7.5bn also represents a growth of 15pc when compared to the level of sales turnover recorded for Q1 2021.
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, but not yet received, available to them.
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 and acquisition activity, MBOs and MBIs, sustainability activity or exploring new markets.
Members of IAIFA include high street banks and a number of independent specialist finance providers.
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.
Overcoming uncertainty
“Our latest figures highlight a significantly increased level of sales from Irish SMEs, across multiple sectors, that have benefited from innovative invoice and asset-based lending solutions over the past few months,” said IAIFA chair David Avery.
“These forward-looking businesses who are open to utilising alternative financial solutions are the ones that will underpin the bounce back of the Irish economy this year despite the dual challenges of Covid and Brexit.
“Not surprisingly, given the times we have just come through, many business owners do not want to take on additional debt in a bid to fund cash flow or finance growth plans. As a result, many are now opting to utilise Invoice finance solutions which is a debt-free funding option that allows them direct and up-front access to 90pc of the value of their unpaid invoices.”
€971m of funding, provided by Invoice Finance, was utilised by Irish companies at the end of Q2 2021. This is up from €856m at the end of Q4 2020, an increase of 13pc in just six months, demonstrating that more and more Irish companies, particularly SME’s, are using Invoice Finance to fund their increased turnover and growth fuelled by the easing of Covid restrictions across the period.
With the total funds available to Irish companies standing at €2.7bn, this shows that there is also 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 Q2 of 2021 stood at 51.8 days. While this is higher than the same figure for Q1 2021 (47.4 days), it is still down substantially since the same time period last year when it stood at 64.1 days.
“The pandemic’s impact on the Irish economy cannot be overstated. But what we are seeing is a strong willingness from businesses to adapt and innovate in order to succeed,” said Avery.
“They are embracing new ways of managing cashflow, which, in the long run, should bring greater financial stability to Ireland’s small and medium-sized firms in particular.”
