ISBN 1-85765-833-7

Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

DEFINITIONS

STATUTORY RIGHT TO INTEREST BILL

MEASURABLE LENDING IN THE UK

MARKET TRENDS

Table 1: Categories of Measurable Lending in the UK, 1998

Table 2: UK Commercial and Consumer Lending Index by Total Value of Loans Outstanding (1993=100), 1993-1997

Market Size

THE TOTAL MARKET

THE UK MARKET

DEBT MANAGEMENT

ARREARS

Table 3: UK and International Factoring and Discounting by Value and Number of Clients (£m), 1992-1997

Table 4: Export and Import Factoring Total Business by Value (£m), 1992-1997

Table 5: Factoring and Discounting Business by Industry SectorÅ (£m), 1997

Table 6: Factoring and Invoice Discounting Business by Client Size ( percent), 1997

Table 7: Estimated UK Market for Factoring and Discounting by Value (£m and percent), 1992-1997

Table 8: Bank Lending to Small Businesses (£bn), 1992-1997

Table 9: Bank Market Shares of Small Firm Customers ( percent), March 1997 and 1998

Table 10: Sources of External Finance for Small and Medium-Sized Businesses ( percent), 1987-1990 and 1994-1995

Table 11: The Number of UK Firms Citing Cashflow/Payments/Debtors as a Problem ( percent), 1996-1998

Table 12: Average Payment Periods in European Countries (days), 1994-1998

Table 13: Value of Commercial and Consumer Lending by Banks and Building SocietiesÅ (£bn), 1993-1997

Table 14: Amounts Outstanding in Finance House Lending (£m), March 1997 and 1998

Table 15: Arrears Analysis on Balances Outstanding (£m), March 1998

Table 16: Amounts Outstanding for Consumer Credit Lending in the UKÅ, (£bn), 1993-1997

Table 17: Limited Company Liquidations and Business Bankruptcies in the UK, 1993-1997

Table 18: Insolvencies Amongst Individuals in the UK (number), 1993-1997

Industry Background

FACTORING

DEBT COLLECTION

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

DEBT COLLECTING AGENCIES

ADVERTISING AND PROMOTION

Table 19: Leading Members of the Factors & Discounters Association by Turnover (£m), 1997

Table 20: Top Ten Companies in the UK Factoring and Discounting Market Share by Turnover (£m and percent), 1998

Table 21: Main Media Advertising Expenditure by UK Factoring and Discounting Companies (£000), Year Ending December 1993-1997

Strengths, Weaknesses, Opportunities and Threats (SWOT)

FACTORING AND DISCOUNTING

DEBT MANAGEMENT

Buying Behaviour

INTRODUCTION

EXPORT BUSINESS

LATE PAYMENT

COMPANY PROFITS BOOM

BUSINESS FAILURES

CREDIT CARD SPENDING

CONSUMER CREDIT

AVERAGE HOUSEHOLD CREDIT EXPENDITURE

Table 22: Method of Financing Export Receivables by Turnover in the UK (£m), 1997

Table 23: Return on Capital by Industry Group ( percent), 1997

Table 24: European Business Failures (number of businesses and percent), 1996 and 1997

Table 25: Prompt Payment of Bills in Selected European Countries ( percent), 1997

Table 26: Credit and Debit Card Spending in the UK (£m), Year Ending December 1996 and 1997

Table 27: Composition of Consumer Credit in the UK ( percent), 1987-1996

Table 28: Use of Different Forms of Credit in the UK ( percent of all adullts), 1993-1997

Table 29: Ownership of Retailer Store Cards in the UK (000 adults and percent), 1995-1997

Table 30: Weekly Consumer Credit Payments in Average UK Household (£), 1997

Outside Suppliers to the Industry

INTRODUCTION

INFORMATION ON LIMITED COMPANIES

CREDIT SCORING

DATA PROTECTION

DATA PROTECTION BILL

OTHER SOURCES OF INFORMATION

Current Issues

GOVERNMENT PROCUREMENT CARD

PURCHASING CARDS

OPEN ACCOUNT IMPORT FACTORING

DE LAGE LANDEN

EURO SALES FINANCE

CLOSE BROTHERS

BANK OF ENGLAND TO CEASE DEBT MANAGEMENT

INVOICE DISCOUNTING

CMR INTRUM JUSTITIA

INTEREST ON LOWER COURT CLAIMS

EUROPEAN UNION PROPOSAL FOR LATE PAYMENT DIRECTIVE

COMPUTER INDUSTRY MARKET INTELLIGENCE

EQUIFAX

Forecasts

INTRODUCTION

ECONOMIC AND FINANCIAL OUTLOOK

FORECASTS FROM 1998 TO 2002

Table 31: Forecast UK Market for Factoring and Discounting by Value at Current Prices (£m), 1998-2002

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

In 1997, the UK market for factoring and invoice discounting enjoyed 17.8 percent growth in value against 1996; with 69.1 percent of the business coming from invoice discounting, and an increase of 26.1 percent in international business. Economic forecasts for the year ahead, however, point to a slowdown in UK investment, which could have a detrimental effect on the factoring market and be accompanied by particular challenges for small business exporters, caused by a continuing strong pound, and the imminence of the European monetary unit (EMU).

The accompanying fiscal tightening, intended to slow the present levels of consumer spending to more sustainable levels, is unlikely to feed through to the UK debt recovery market for at least 2 years. However, the Government's attack on poor UK payment practices through its Late Payment of Commercial Debts Bill, and the overall improvement taking place in credit management practices, could affect the quality of debts that do become overdue and increase the costs of recovery.

At the end of 1997, the value of total commercial and consumer lending by UK banks, building societies and finance houses reached around £921bn, of which Key Note estimates between 2 percent and 4 percent is likely to fall into arrears. This would provide a short and long-term debt recovery market valued at between £18bn and £37bn.

The average UK household is spending between £500 and £3,500 each year on items likely to be available on credit terms in a market valued at between £12bn and £82bn. Hire purchase and mail order instalment payments are the most popular form of credit purchase, used by 8.3 percent of UK adults, followed closely by credit card purchases, which are used by 7.9 percent.

Key Note forecasts that by the year 2002 at current prices, the UK market for factoring and discounting will increase by 85.7 percent to reach £110.8bn. Growth during 1998 and over the next 2 years will average 15 percent per annum at current prices. (In real terms at 1998 prices, the average per annum increase will be nearer to 12.5 percent per annum.) It will then accelerate to an annual growth rate of 20 percent per annum by 2002. Invoice discounting will continue to slowly expand its share of the business, reaching £84bn (75.5 percent) by the end of the forecast period.

Text © 1998 Key Note

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