ANZ abandons invoice discounting market

ANZ has abandoned its discount invoicing division, despite interest in the cashflow financing tool surging in the last 12 months as the downturn has worsened. But an ANZ spokeswoman has denied the accuracy of reports that suggest small businesses are the main users of discount invoicing, and that “this is not actually the case … they are a fairly small proportion”.

“ANZ will be migrating the less than 1% of commercial customers who use the invoice finance product to other alternatives over the next 12 months, with some customers likely to find a more suitable and less administratively burdensome banking product as a result.”

“We are notifying our commercial customers of the changes with individual phone calls and we will visit each customer to establish alternative providers or options, which may include commercial bills, overdrafts or term loans.”

The bank says customers may even experience cost benefits as a result of the changes, which were decided on after an internet revenue assessment.

Invoice financing allows customers to borrow up to 80% of the value of outstanding sales invoices, relieving cashflow pressure for many businesses.

The Institute for Factors and Discounting estimates that the total turnover recorded for discount invoicing was $62.7 billion in the year ending March, a 16% increase from the previous year.

ANZ’s decision to abandon the practice comes after BankWest’s similar move out of the market last year. NAB, Commonwealth Bank and Westpac are now the remaining major banks offering discount invoicing.

David Whiting, acting head of debtor finance for Oxford funding, said that the debtor finance industry is growing but several banks may realise they do not have sufficient expertise and systems to manage their products. He said this will provide opportunities for other businesses to take up the slack.

“With the exiting of some of the players that have more recently included Bankwest and ANZ, the market opportunity for specialist providers is becoming far greater…” he said.