News of UK manufacturing growth and an upturn in SME performance points to growing confidence among the country’s businesses. It is vital that this growth is built upon, and invoice finance has a key role to play.

UK manufacturing activity grew at its strongest rate for more than a year in May, with SMEs playing an important part in the upturn. At the same time, the latest Business Factors Index shows growing customer numbers and rising confidence among SMEs in the south west. According to the Index, over half of companies polled feel that they are performing well and are optimistic about the future.

The news will give more weight to the growing belief that the UK business sector is strengthening and is on a tentative path towards recovery. So, it’s important to nurture this forward momentum and providing the necessary business finance, including SME finance, is essential. The latest data on business lending from the Bank of England underlines the importance of invoice finance.

According to the Bank of England, net lending by banks using the Funding for Lending scheme in Q1 2013 fell by £300 million. While net lending is expected to increase throughout the rest of the year, not least as a result of the £20 billion expansion of the scheme aimed specifically at SMEs, these figures provide a clear indication of how the small business lending landscape has shifted in recent years.

Traditional bank lending no longer dominates SME finance to the extent that it once did. Alternative finance, led by invoice finance, has become firmly established as a rival source of small business credit. As traditional lending still accounts for over 75% of SME finance, the role of invoice finance looks set to grow and grow.

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