It was once said that eight out of ten businesses went bust not because they were not profitable but because they ran out of cash and were unable to manage their cash flow adequately. Any new start business will probably go to their bank as a first port of call and try and arrange a bank overdraft. If you have a sympathetic bank manager and if he likes you allotyou might get a £10k facility. Anything over and above that they will want personal guarantees , register a debenture over the business and will need to take a charge over your personal property providing you have enough equity.
In the current environment of banks being difficult in terms of providing new funding it might be worth mentioning another reason why a business should use another invoice discounting company other than their own bank particularly where a commercial mortgage is involved.
There are many reasons as to why a business would want to change their invoice factoring company. The main reason is through a lack of flexibility when it comes to credit limits against individual customers. It may also be that the factoring company that you are using restricts the overall funding limit. It may also be that they are no good at collecting your debt. Whatever your gripe it is not unusual for a business to want to change a factoring company and hopefully this blog will provide some information as to how to do it.
We all know that an invoice factoring can provide immediate cash of up to 85% of unpaid invoices. This provides valuable cash and working capital when a bank overdraft might not provide enough of a working capital facility. However there are instances when this might not be enough. Depednding on the seasonality of your business and timings of payments to key suppliers and Vat returns etc there might be occasions when an overpayment is required. Therefore it is imperative that when choosing a factoring or invoice discounting facility that the flexibility and approachability of the finance company must be taken into consideration. Not all finance companies are the same and a proper invoice factoring company will be able to help you in times of need.
Hopefully now that we are out of the recession we will once again start to see businesses grow and to flourish. The benefits of invoice factoring during a period of growth are obvious however many businesses will be tempted to go down the overdraft route which in the long term may restrict a businesses cash flow and ability to operate from a liquidity point of view. It is also important that we choose the right factoring or invoice discounting company because not all of them are the same and they don’t offer the same level of funding and flexibility.
Invoice factoring is still rone of the most buoyant forms of finance available in the UK today. There are still plenty of finance companies offering various forms of invoice finance. Unlike the asset financing and leasing market which seems to have dried up somewhat the choice and availability in the invoice factoring market appears to be plentiful with plenty of options and choices. A quick search on the internet search engines will reveal numerous finance companies offering invoice factoring. There are just so many to choose from. How do you know which product is best for your business and how do you know which invoice factoring company will be best suited ti delivering the right sort of service to your business. In short a good independent factoring broker will be well placed to advise you of the may products and services available. XL Business Finance provides a free factoring and invoice discounting service which ensures the most suitable finance companies are recommended to your business.
Invoice factoring provides cash against unpaid invoices. Most finance companies will pay up to 80% of unpaid invoices and give you credit of up to 90 days. Before the credit crunch it may have been possible to obtain up to 90% of your sales ledger however this is very uncommon in the the era of very cautionary finance companies. When choosing an invoice factoring company it is important to take into consideration how flexible they may or may not be.
Invoice factoring enables a business to obtain immediate cash against its unpaid sales ledger. There are a few finance companies that can actually provide you cash within 24 hours. If you have a sales ledger of £10ok you can expect to receive an immediate cash injection of up to £90,000. The finance company uses the unpaid invoices as security and they are experts in chasing and collecting your debts. Most finance companies will provide credit for up to 90 days from the point you raise the invoice.
Invoice factoring can release up to 90% of a businesses unpaid invoices. Choose the right finance company and it is possible to get the cash released to your bank in 24 hours. However when it comes to providing bad debt protection or a factoring facility with non recourse not all finance companies are the same. As we have mentioned in previous blogs factoring adds value to any business. It is not just about re lasing cash, it is about choosing a finance company that can provide a credit control service in a efficient manner without upsetting any of your customers in the process. The bad debt protection is exactly the same in that not all finance companies are the same therefore it is imperative that you choose the right finance company for your particular requirements.
In theory invoice discounting finance will release up to 80-90% of your total invoice book. All finance companies have eye grabbing headline rates and promise the earth when it comes to releasing cash. However the biggest problem with invoice finance and factoring is that it is very difficult to obtain funding against a client if they have a very poor credit rating. As most finance companies will tie you into a 12 month contract or even longer it is imperative that when choosing a finance partner that potential credit limits are taken into consideration. XL Business Finance has over 10 years experience in helping and advising clients choosing the the correct invoice finance company.
XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.
XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.
