A Receivables Exchange in the UK

Prevalence of receivables finance in Europe

European trade is considered to be more dependent on invoice financing than the United States.

The UK has the highest penetration of factoring or invoice discounting in the world, at c. 10% of GDP, vs. the United States at 1% of GDP.

France, and other European countries, suffer from excessive regulation with regards to receivables financing, limiting the growth and development of the industry. Hence, with high GDP penetration in the UK, a receivables exchange may or may not be marketable.

The advantages of a receivables exchange

The concept of a receivables exchange – an online marketplace where invoices are bought and sold – has come to the UK in the form of Marketinvoice. Receivables – otherwise known as trade debtors, or outstanding invoices – are bought and sold on an online exchange in real time. The first receivables exchange in the UK is MarketInvoice, which began in April 2010. The advantages of such a receivables exchange are manifold. However, rather than cannibalising the existing invoice finance market, the exchange model allows for new aspects of pricing to occur. Invoices that perhaps previously were disallowed by factors are allowed, increasing funding, allowing businesses to grow and new transactions to occur.