Finance · 2 November 2015

Small businesses’ unsold inventory increases to 50.9bn

The ABFA said UK SMEs have found themselves sitting on large amounts of unsold stock after the recession
The ABFA said UK SMEs have found themselves sitting on large amounts of unsold stock after the recession
The value of small businesses’ unsold inventory has hit 50.9bn rising over 2bn in a year, according to new research from the Asset Based Finance Association (ABFA).

The body representing the UK and Republic of Ireland’s asset based finance industry said the number was up four per cent from the 2014 value of 48.8bn.

It said the growth had accelerated due to the economy not expanding as rapidly as some had hoped following the recession. While small and medium-sized firms will want to reduce any excess inventory, the ABFA said businesses facing problems with large amounts of unsold stock can ensure it doesn’t become too much of a burden on resources by using it to secure an innovation form of finance.

A recent study from ABFA found there had been an increase of 67 per cent of firms using excess inventory to access funding in the last year from 530m to 870m.

While that form of asset based finance is predominantly used by medium-sized firms, the ABFA feels there is considerable scope? for small businesses to increase use of this funding source too.

Jeff Longhurst, chief executive of the ABFA, said: Many UK SMEs have found themselves sitting on large amounts of unsold stock after the recession but businesses can still extract a lot of value from this inventory by using it as collateral and therefore lower their cost of borrowing.

Longhurst said that while an unexpectedly large inventory can prove to be a big drain on cash flow, more businesses facing this problem need to be aware that it can also unlock access to finance that may previously have been out of reach.


 
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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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