When it comes to organising a factoring facility there are basicLly two choices a bNk owned factoring compnay is a decision of the bank but as we know the banks try and be all things to all men And they don’t necessarily five the best service. A independent factoring company is a business set up independently from the banks and they usually specialise in factoring alone and As such their service is second to non.
FActoring is all about adding value in terms of providing the most possible cash against your unpaid invoices. It is also about collecting your cash within 90 days in the most efficient and professional manner.
Therefore cheapest is not always best. There is Absolutely no point going with the cheapest quote if that particular finder cannot get the cash through the door . For example a number of bank operated factoring companies will only telephone your top ten customers and leave the rest to chance or to letter.
At XL Business finAnce we have plenty of experience in pointing our customers in the right direction. We would recommend no more than two or three ompanoes that will best suit your particular requirement. The companies that we recommend will be selected based on your location, turnover, quality of debtor book, length of time trading and profitability. Our recommends will be very similar in terms of business they are looking for but it will come down to personalities as go which one you choose. As soon as you start seeing more than two or three companies they will not all take you seriously and as such you may not end up with the best possible deal.

During the  last week we received an enquiry via our website from a furniture manufacture needing to refinance some existing equipment to provide cash for working capital. Unfortunately the age of the kit meant that the value for refinancing purposes was very low and would nit provide enough cash. On digging a bit deeper it transpires that the customer had been told that they could not use factoring or invoice discounting and as such was struggling for working capital. Businesses which are involved in the construction industry or any other contractual business  obtain payment upon application of work to date rather than by invoice. Whilst non of the high street banks are able to fund such applications the good news is that are one or two factoring companies that can indeed fund these applications. They have their own in house surveyors that have experience in all industries and they can verify that the applications are reasonable and accurate.

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At a time when many of the high street banks and finance companies are still difficult to deal with it is imperative than any application for hire purchase or leasing facilities to the few remaining finance companies are presented in the best possible format. At XL Business finance we have over ten years of experience and expertese in organising competitive finance facilities for a variety of businesses. The following will give you an idea of the type of information that we will collate and present to the finance company.

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Last week XL Business finance was approached by a London based printing company that  needed  finance for a second hand print ppress costing approximately £80,000. Although the business was profitable and there was a strong rational for the purchase the deal did not tick all the right boxes for a high street finance company. A well known print finance company was fully exposed at around £250k and were unable to advance an further funding. We received the enquiry via our website and very quickly we were able to secure a hire purchase facility with a privately owned leasing company. This is a prime example as to how a asset finance broker can add value when it comes to organising hire purchase and finance lease facilities.

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The ability to obtain cash against your unpaid invoice can have a massive affect on your businesses cash flow and hence your ability to trade. Invoice financing is the generic term for factoring and invoice discounting both of which will release up to 80% of your unpaid invoices. The remaining 20% is paid when your customer pays you less any charges due to the invoice discounting company. As cash becomes more and more tight we understand that credit terms are being stretched further and further. Invoice financing is the perfect solution to ease your Cashflow and unlike a bank overdraft the facility is not repayable on demand and will grow with your business.

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To ensure that you get the best possible deal when financing your capital equipment you should use a well established and reputable asset finance broker that has been around the block a few times and knows and understands the leasing and hire purchase market. Beware of the retired  or recently made redundant bank manager as they have absolutely no idea what is available or achievable in the asset finance market. As one of the countries leading asset finance introduces we know exactly which finance companies finance what sort of assets for what sort of businesses.

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It appears that a bank overdraft as a means to financing a businesses cash flow requirements is becoming second place behind invoice financing. For starters it appears to be more and more difficult to obtain an overdraft. For many businesses it may be that they can obtain a token amount of £10-£20k and this may depend on the length of time a business has been  trading and whether it is profitable or not.

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We had a request yesterday from a web development company wanting some form of  invoice finance. They had aboiut fifty customers on twelve month contracts all of which paid a ten percent deposit on the work to be done and then on a monthly basis thereafter. They were invoicing at the beginning of each month for the work to be carried out for the following month. Invoice financing only works for work that has already been carried out and that is being invoiced with credit terms of thirty, sixty or ninety days. Although we were not able to help we put this enquirer in touch with a company that can offer contract finance , a totally different product.

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Any business wishing to purchase plant and machinery will know that the banks at the moment are not the most accommodating when it comes to asset finance. During the credit crunch any independence the bank owned leasing companies had will have been pulled back in under the umbrella of the main bank. What this means is that  now there very little difference in applying for a commercial bank loan or a hire purchase or leasing facility. Indeed you will find that your application for either will probably go to the same underwriter for approval. Never has it been truer that the banks will take into consideration you overall exposure when approving any type of borrow including any outstanding finance lease facilities.

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And the winner is! It depends!

Both an invoice discounting and factoring facility will release up to 85% of your unpaid invoices on a revolving credit basis. In theory both facilities will grow as your turnover increases providing you with valuable cash and working capital. In our opinion both are far better than a bank overdraft which is not as flexible and will be capped depending on how profitable or the level of security available.

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