Demica's latest research report looks at current trends in the use of trade receivables finance and concludes that businesses are increasingly seeking to raise finance from traditional asset categories such as trade receivables.

 Over 1,500 firms with more than 50 employees in the UK, France and Germany were surveyed. The research reveals that Europe is turing back to trade receivables, considered to be one of the most liquid and creditworthy asset categories on the balance sheet. The current scarcity of creidt was listed as a  major setback, encouraging firms to raise a greater proportion of finance in this way. A significant number of firms also reported having no other choice but to offer asset categories such as trade receivables if they were to convince banks to extend lines of credit. The key findings were:

44% of European firms believe businesses will generally increase their use of trade receivables based finance over the next 12 to 18 months.

36% of European firms are already raising finance against the security of their trade receivables.

Overall levels of securitisation have dropped as a result of the crisis in the financial markets. However, securitisation of more robust, stable assets such as trade receivables is expected to rise.

Current scarcity of credit was listed as a major financial setback for European firms, with 56% believing that it will now lead to larger firms having to raise a greater proportion of finance based on trade receivables securitisation.

The situation appears to have reached crisis point as 61% of businesses report having no other choice but to offer asset categories such as trade receivables to convince banks to extend lines of credit.

Growth in the use of trade receivables finance is being enabled through technology-based services that automate the complex processes involved and provide regular monitoring and reporting of the asset base.

Read the full report