A new report released by London-based working capital solutions provider Demica has revealed a growing trend in receivables-based finance in Europe.
The report highlights that more businesses are exploring non-traditional products, including securitisation and asset-based lending.
Over 40% of the 1,500 firms surveyed across Western Europe report that their use of receivables-based finance has increased over previous years with a similar amount planning to make more use of this type of financing next year.
In an attempt to mitigate the continued scarcity of traditional lines of credit, 37% of businesses surveyed have monetised their receivables in the past 12 months.
Furthermore, almost 60% of those questioned say that banking relationships have been irrevocably altered during the last two years, which Demica claims has led to customers demanding a wider and more imaginative range of finance.
“Since the early 2000s, there has been a rising awareness of trade receivables as a viable asset category and the market for receivables-based finance now appears to be entering maturity, with firms making more significant usage of the category than in previous years,” remarks Demica in a statement.
Phillip Kerle, chief executive officer at Demica, adds: “Scarcity of traditional credit has become a real problem over the last two years. If European firms are to raise finance successfully in the future, they would do well to look for liquidity hidden in their balance sheets. Trade receivables-based finance is leading the way thanks to the high quality security of invoice debt – allowing for significantly improved access to credit.”
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