Irish companies with a turnover or up to €5 million received €500 million in invoice finance in the first quarter of this year, according to new figures.

The Asset Based Finance Association (ABFA), the body representing the invoice finance industry in the UK and Ireland, released the figures.

Companies with a turnover of €5 million or less accounted for 40 per cent of all funds advanced via invoice finance in quarter one.

Invoice finance is an alternative to traditional lending products in which businesses borrow money based on amounts due from customers. It helps businesses improve cash flow.

The sales turnover generated by Irish companies using that type of finance grew 12 per cent in the same period, ahead of the four per cent growth seen in the UK.

The figures also showed that more mid-tier companies are using invoice finance, as companies in the €1 million to €5 million bracket increased by seven per cent.

While companies from a variety of sectors utilise it, there was an increase in manufacturing sector companies using invoice finance in the first quarter of the year.