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Archive for February, 2011

Print Refinance and Factoring Package

Friday, February 4th, 2011

Chad Monsirrims continues to look for a serial number following a refinance package and provision of a new factoring facility for a Manchester based print company

A Manchester print finance company needed to restructure their finances following an accumulation of VAT and PAYE arrears totalling approx £35k. Their existing Komri printing press had only 18 months to go with their existing funder. XL Business finance was able to refinance the machine and provide enough money to repay the existing leasing company , pay the VAT and PAYE arrears and also provide a surplus for additional working capital. Happy days.

In addition the business switched to a more flexible factoring company to provide additional working capital. The printers existing bank were severely restricting cash flow due to a difficult trading period, hence the crown arrears. A change in factoring company and the refinance of the existing press gave the business a new lease of life.

At one point the company was considering injecting personal cash secured against the press. Whilst this seems a good idea , obtaining title in a refinance situation can present many pitfalls. If the documentation was not completed correctly it may be possible that they could be accused of selling the press under preferential terms resulting in the transaction being null and void. It would also been imperititive that the customer got the right supporting documentation. If you do not get debenture waivers , proof of title etc it may be possible that a transaction be deemed null and void in the event of an insolvency. A specialist refinance company ensures that all this is correctly boxed off and that there can be no repercussions down the line.

Refinance printing Machine

Friday, February 4th, 2011

XL Business Finance associate Chad Monsirrims checks a serial number following another successful refinance

Credit Insurance explained

Thursday, February 3rd, 2011

It is widely believed that credit insurance can only be obtained on the back of a factoring or invoice discounting facility. This is not necessarily the case and it might be that you can obtain a better deal from an independent company. You may also wonder why one invoice finance company can insure one of your customers but not another. Hopefully this article will explain some of the misconceptions.

Any business can go to a specialist insurance company to obtain credit insurance. The broker will go to the various insurance companies and obtain a packaged policy from the best insurance company. There are a number of fundamental differences which may work in your favour.

Firstly credit insurance companies provided by the banks and the factoring and invoice discounting companies only kick in in the event of an insolvency situation. It is indeed possible to obtain credit insurance that kicks in in the event of a protracted claim. As far as we are aware we there is only one invoice discounting company that provides credit insurance in the event of a protracted dispute. Call me cynical but does anyone else think that factoring companies allow debtors to exceed 90 days so they can.

Secondly factoring and invoice discounting companies  charge against the gross ledger as opposed to the net ledger which is possible to do via the correct means.

Thirdly once a debt has exceed 60 days over the normal credit terms the insurance provider will chase the debt on your behalf provided. It doesn’t matter if if your factoring company is supposed to be doing it. two so to speak is better than one

It also possible to get credit insurance for export debt as well

You may also wonder why one factoring company can insure a debt another factoring company cannot..

Factoring Finance explained

Wednesday, February 2nd, 2011

Factoring is simply the ability of a business to raise cash against unpaid invoices. Typically 80 % funding can be obtained however depending on a businesses personal circumstances a higher payment or even a lower prepayment may be available.

Unlike invoice discounting factoring is provided on a disclosed basis which means that your customers are aware you are factoring your invoices. In fact you will add to your invoice a clause asking that payment for the invoice is paid direct to the finance company. Upon receipt the finance company will pay the remaining 20% due to you less their interest charges and fee for running the account.

Factoring can also provide full credit control leaving you free to run your business instead of worrying about chasing your customers for payment. It is important to remember that factoring is a value added product and is not just about providing a cash flow facility. What is the use of having the cheapest funder in town if at the end of the day they are hopeless at collecting your unpaid invoices. This is where a good independent factoring broker can add value to the decision of choosing the right funder

There  are many criteria that you should consider when choosing the correct factoring company for your business. If you are a new start business there are finance companies that are geared up specifically for this purpose. Also your geographic location should have a significant bearing on your decision as some of the smaller independent that can provide a n excellent service but  are very much locally based. also the nature of your business and the type and quality of your debtor book will also have a bearing on your final choice of factoring company.

There are plenty of companies to choose from and as such a good impartial view point will have alot of time and potential future heartache!

Factoring for a new start Business

Tuesday, February 1st, 2011

Believe it or not, even in the current economic climate, there are still one or two individuals wanting to start a business . Madness I here you shout. However in fairness they are tending to be characters that have been around the block a few times, are quite well respected and connected in their particular sector, have maybe gone off to do something else and then think blimey I can make a few quid here when things really start to pick up. Factoring is nearly always a product that most new businesses automatically require. Cash is king they say. Save your cash for the unexpected and fund as much as possible in the business.

However there are so many different factoring companies available how do you know which one to choose. In our opinion it is relatively simple. A good factoring broker should be able to point you in the right direction. For starters a new start business is probably best steering away from the banks. Banks might be OK at providing invoice discounting facilities for the more established business however factoring is all about adding value in terms of providing an efficient credit control service and providing the right level of funding against he debtor book. In our opinion and many other professionals in the financial community will agree, that locally based and  independent factoring company is better placed to provide such a service. Independent in that they are not bank owned but they do lend their own money.

Independents tend to specialise in factoring. It is their core product unlike the banks and some building societies that have jumped on the band wagon of offering factoring and invoice discounting. XL business Finance can help a new start business assess the right type of funding partner for their business. Any recommendations are based on location, sector, projected,  turnover and type and quality of the debtor book