Q1 marks five year high in business turnover

More businesses reported an increase in new customers and confidence, suggesting a more positive year ahead for small and medium-sized businesses.

The Business Factors Index from leading independent invoice finance provider Bibby Financial Services, has been charting the performance of its client base across key industry sectors including manufacturing, construction and business services, for the past five years from a base point of 100.

Traditionally seasonal factors mean the average performance for the first quarter of the year is low. But in 2012 it reached 100.3 which is the highest level for Q1 since 2008 when it was 90.4. This suggests there could be increased growth throughout the year if there is similar increased activity in the remaining quarters.

In addition the Index analysed the outlook among 500 SME business owners which also depicts a more positive Q1 as almost half of businesses saw a significant rise in the number of new and former customers returning.

The report found 45 per cent have seen former customers returning during Q1, compared to 33 per cent in the last quarter of 2011. And 41 per cent say they have been able to welcome new customers, up from 32 per cent in the previous quarter.

The encouraging activity during Q1 is coupled with a rise in the number of businesses applying for funding with almost one in five, (17 per cent) extending their external finance facilities.

Business funding in a range of forms has seen an increase in applications from traditional bank facilities to alternatives such as invoice finance and asset-based lending. The Breedon Report from the Department of Business Innovation and Skills (BIS) released in March, has placed a new emphasis on the importance of these funding options for businesses in need of financial support.

Edward Winterton, executive director for Bibby Financial Services, says: “We are encouraged by this strong start to the year among our own client base of 4,000 as we feel this could be indicative of an uplift in activity across the economy.

“In simple terms, if we see year-on-year improvements like this during the rest of 2012, it will be a welcome return to growth, although there is still a long way to go before we can talk about full recovery.

“There are concerns about the level of growth in the economy of course, but we have seen business funding rising during this quarter which we believe is a result of the extra business coming through the doors, and that will help SMEs plan for growth if the economy starts to improve as we hope.

“Applications for a range of funding options have increased from traditional bank loans and overdrafts to more flexible solutions such as invoice finance. This is an option that the Government has said it is keen to see more businesses take up following the publication of the BIS Taskforce report into non-bank lending earlier this year.

“As a leading invoice finance provider for almost 30 years, we understand how important it is to support businesses through difficult times and provide a funding solution that is not only flexible but grows with the needs of the business as they start to benefit from the good times.”