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Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

DEFINITIONS

MARKET TRENDS

Table 1: Categories of Measurable Lending, 1997

Table 2: Index of UK Commercial and Consumer Lending Based on Total Value of Loans Outstanding at the End of Each Period (index 1992=100), 1992-1996

Market Size

THE TOTAL MARKET

MARKET SECTORS

Table 3: Total Business of UK and International Factoring and Discounting (£m, percent and number), 1992-1996

Table 4: Export and Import Factoring (£m), 1992-1996

Table 5: Factoring and Invoice Discounting Business by Industry Sector (£m and percent), 1996

Table 6: Factoring and Invoice Discounting Business by Client Size ( percent), 1996

Table 7: Estimated UK Market for Factoring and Invoice Discounting and Market Shares (£m and percent), 1992-1996

Table 8: Bank Lending to Small Businesses (£bn), December 1992-1996

Table 9: Commercial and Consumer Lending by Banks and Building Societies - Amounts Outstanding (£bn), 1992-1996

Table 10: Finance House Lending - Amounts Outstanding (£m and percent), November 1995 and 1996

Table 11: Arrears Analysis on Balances Outstanding (£m and percent), November 1996

Table 12: Consumer Credit Lending in the UK - Amounts Outstanding (£bn), 1992-1996

Table 13: Insolvencies in England and Wales, 1992-1996

Industry Background

FACTORING AND DISCOUNTING

DEBT COLLECTION

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 14: Factoring and Invoice Discounting Market - Leading Members of the Factors & Discounters Association (£m), April 1997

Table 15: UK Factoring and Discounting Market Shares by Client Turnover (£m and percent), 1996

Table 16: Financial Profile for Lombard NatWest Commercial Services Ltd (£m), 1995 and 1996

Table 17: Financial Profile for International Factors Ltd (£m), 1995 and 1996

Table 18: Financial Profile for Griffin Credit Services Ltd (£m), 1995 and 1996

Table 19: Financial Profile for Alex Lawrie Factors Ltd (£m), 1995 and 1996

Table 20: Financial Profile for TSB Commercial Finance Ltd (£m), 1995 and 1996

Table 21: Financial Profile for Legal & Trade Collections Ltd (£m), 1995 and 1996

Table 22: Main Media Advertising Expenditure by UK Factoring/Discounting Companies (£000), 12 Months to December 1993-1996

Strengths, Weaknesses, Opportunities and Threats (SWOT)

FACTORING AND DISCOUNTING

DEBT MANAGEMENT

Buying Behaviour

INTRODUCTION

SMALL BUSINESS PROBLEMS

LATE PAYMENT

EUROPEAN PAYMENT HABITS SURVEY

EUROPEAN COMMISSION RECOMMENDATION ON LATE PAYMENT

BRITISH STANDARD ON PAYMENT PERFORMANCE

SOURCES OF FINANCE FOR SMALL BUSINESSES

CONSUMER CREDIT

STORE CARDS

CREDIT EXPENDITURE

HOUSEHOLD EXPENDITURE

TYPE OF INDEBTEDNESS

CONSUMER COMPLAINTS ON CREDIT HANDLING AND COLLECTION PRACTICES

Table 23: Members of the Factors & Discounters Association by Volume of Client Turnover ( percent), 1990-1996

Table 24: European Average Payment Periods (days), 1993-1997

Table 25: Average Payment Periods in European Countries, 1994 and 1995

Table 26: Composition of Consumer Credit in the UK ( percent), 1987-1994

Table 27: Use of Different Forms of Credit by Adults in Great Britain ( percent), 1993-1996

Table 28: Ownership of Retailer Store Cards by Adults in Great Britain (000 and percent), 1995 and 1996

Table 29: Retailer Credit Total Sales Breakdown (£m and percent), First Quarter 1992-1996

Table 30: Credit Expenditure as a percentage of Total Household Expenditure on Selected Items, by Age of Head of Household, 1994/1995

Table 31: Weekly Consumer Credit Payments in the Average UK Household (£), 1995

Table 32: Types of Indebtness by Sex and Age ( percent), 1995

Table 33: Types of Indebtedness by Social Class and Region ( percent), 1995

Table 34: Analysis of Consumer Complaints Received by the Finance & Leasing Association (number and percent), 1994-1996

Outside Suppliers to the Industry

INFORMATION ON LIMITED COMPANIES

INFORMATION ON UNLIMITED COMPANIES AND PRIVATE INDIVIDUALS

CREDIT SCORING

DATA PROTECTION

DETECT

CPA (PAID) LTD

OTHER SOURCES OF INFORMATION

Current Issues

EQUIFAX EUROPE

GRIFFIN FACTORS

BARTERCARD

PRIVATE DEBT COLLECTORS FOR INCOME TAX

EUROPEAN MONETARY UNION

LONDON SCOTTISH BANK

FIRST NATIONAL BANK

WALES CO-OPERATIVE CENTRE

LLOYDS TSB MERGER

BBA STATEMENT OF PRINCIPLES

THE CONFEDERATION OF BRITISH INDUSTRY

ETHNIC BANK

CD-ROM AND THE INTERNET TO HELP EXPORTERS

Forecasts

FACTORING AND DISCOUNTING

DEBT MANAGEMENT

Table 37: Forecast of the UK Market for Factoring and Discounting at Current Prices (£m), 1997-2001

Table 36: Forecast for the UK Market for Factoring and Discounting at 1996 Prices (£m), 1997-2001

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

Over the past few years, the UK market for factoring and invoice discounting has enjoyed average growth of 20 percent per annum. Disillusioned by the treatment they received from High Street banks during the recession, many small and medium-sized businesses have turned instead to this alternative form of finance. Exporters are finding the services offered by international factors -- such as advice on local markets, protection against exchange risk and faster transfer of funds to the UK -- invaluable.

By the year 2001, at current prices, Key Note forecasts the market will increase to an annual value of £102.1bn, which is just 2.4 times its 1996 level of £42.5bn. 76 percent of the market will be for invoice discounting, which compares with the 71.6 percent share this segment held in 1996. In real terms, at 1996 prices, growth will average at 18 percent per annum over the next 3 years and then slow to 11 percent per annum as we begin the next Millennium. Small businesses in the UK rate late payment of trade debt as one of the most important problems they face. Surveys show small companies come off much worst and have to wait 50 percent longer than larger companies to get paid. Findings suggest more than half the delays in payment are intentional and in this respect, the UK has the worst record in Europe.

The UK market for debt recovery has no statistical basis -- although values of around £20bn are mentioned. Since 1995, the total volume of consumer credit in the UK has grown steadily, but by the end of 1996, the subsequent increase in bad debts was only just starting to feed through into debt recovery business. Over the next few years, the present very tight market should improve, but its future looks uncertain.

Credit scoring and sophisticated credit management systems are constantly improving the quality of credit granted, and the reduced cost of computing is encouraging more companies to carry out their own in-house debt management. As a result, the volume of business which finally reaches the professionals is reducing in value and is more difficult, and costly, to collect.

As developments in new technology continue to dramatically alter the worldwide payments industry; electronic cash begins to replace money; and shopping habits change. So in turn, the debt management business, to replace lost revenues and achieve the levels of profit needed to sustain itself, faces an ongoing problem of producing new products and services which recognise the changes taking place and those likely in the future.

Text © 1997 Key Note

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