Earlier this week, I enjoyed a couple of days in Edinburgh attending the Asset Based Finance Association’s annual conference. ABFA represents the asset based finance (invoice finance and asset based lending) industry in the UK and the Republic of Ireland, and the conference is attended by most of the senior leaders in the industry.Once again, the issue being most debated was: How do we attract more businesses to the benefits of asset based finance?The invoice finance market is growing, of course – slowly. There are now around 45,000 businesses in the UK using it, but to put this into some sort of context it’s estimated that over 400,000 businesses are suitable for this type of funding and could be benefiting from it. We’re barely scratching the surface.And it’s even less appealing to smaller SME’s, with less than 1.7% of them funding their business with a factoring or invoice discounting facility.So, why aren’t more SME’s using asset based finance?1. There aren’t enough advocates.ABFA member research shows that 86% of clients using asset based finance are satisfied or very satisfied, but not enough of them are compelled to tell others about how it benefits their business. A happy client is an advocate and the industry needs to do more to leverage this.Too few professional advisors, particularly accountants, understand and promote the benefits of invoice finance & ABL. Until they do, we will never reach the many thousands of SME’s that could be growing with our support.2. There’s still too much jargon. Although many of the leading funders are taking steps to simplify the language used in their contracts and other correspondence, we haven’t done enough to remove jargon completely. Front-line invoice finance staff still use too much of it.A starting point would be to eradicate use of the words ‘factoring’ and ‘invoice discounting’ – both of which are out-dated, and replace with ‘asset based finance’.3. The pricing is (at least perceived) as complex.Most providers adopt a very similar pricing structure but there are still too many variances, including ancillary charges.Some have the led the way with ‘bundled’ or single fee pricing but this is not necessarily appropriate for all facilities, particularly larger ones.A standardised approach to client on-boarding, including the explanation of fees and charges, is required – implemented through formal industry training and accreditation.4. Saying goodbye is the hardest thing to do… Short-term contracts have done a lot to address the perception that it’s difficult to get out of invoice finance but the fact of the matter is, the process of terminating a facility or switching to another provider is not as straight-forward as it should be.Asset based funders should follow the example set by some banks and other financial organisations, and make sure that the experience of leaving them is as positive as the rest of the relationship.5. The technology is stuck in the dark ages. There have been some notable developments in recent years, such as the ability to extract real time data from client’s accounting systems, but generally speaking, technology in the asset based finance industry is not developing quickly enough – a good example being the lack of a reliable mobile platform.This list is certainly not exhaustive, and I accept is a generalised view of some of the challenges the industry faces in realising the potential of asset based finance. It has a vital role to play in helping businesses of all sizes grow, and in the future prosperity of UK plc.How are we going to unlock it?