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.

OK it is free in that we will not charge you a fee however we do take an introductory commission from the finance company. We are confident that we will provide y0u with the names of  two possible finance companies that are most suited to financing your business. Unlike some independent invoice  factoring brokers we are not tied into any one particular finance company. We have access to over twenty or so different finance companies. Brae some factoring brokers ( particularily  the ones that have different finance company logos on their site) take an introductory commission just for passing the referral. Nothing else happens except you get bombarded with loads of calls. By using XL Business Finance we control the referral part of the process which keeps appointments and provision of information to a minimum. If you happen to read this blog before the end of Jan 2010 you will be entitled to a free Mars bar!!!!!!!!

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.

 Imagine coming to the month end and there are not quite enough invoices in the pipeline to draw down enough cash to pay the wages. However you have a few big  jobs around the corner and you know you will catch up the following week. If you are with a bank based factoring or invoice discounting company and you need a bit of extra cash then good luck trying to find a decision maker. If you have chosen a smaller and sometimes independent factoring company you will have a much greater chance of getting an overpayment. At XL Business Finance we do have clients who have moved to bank based factoring companies and have moved back to smaller independent for this very reason. They know at the end of the month that if here are going to be any short term cash flow problems they need a flexible finance company that they know that after one phone call and no more than 24 hours later they have some extra cash.

An independent factoring company is one that is not bank owned and therefore does not have the same red tape and bureaucratic hierarchy to go through to get decision done. They have usually been set up by quality guys that have been within the factoring and invoice discounting industry for many years. The MD will sit in the same office as all the other staff so special requests and help can be obtained by walking straight into his or her office.

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 is usually provided on a diclsed basis. Ie your customers will be ware that you are factoring your invoices as you provide the finance company bank details on your invoice so your customers will pay the proceeds into a trust account. The finance company will clear the trust account everday payng you the remaining  balance of 10-20% less any charges due.

As factoring provides credit control , in our opinion the banks do not always provide the best service. It has been said that certain well known high street banks will only chase by telephone your top 3 or 4 customers and leave the rest to be chased by phone. Therefore the debt turn as it is known can be quite lengthy. A specialist factoring company will chase by telephone every single one of your debtors and as such tend to collect the money in allot quicker. Although some of the more specialist factoring companies can be a little more expensive it is no point going for the cheaper option if you are not getting your cash in quick enough. It must be remembered that factoring is very much a value added product and you tend to get what you pay for.

XL Business Finance can help you understand the difference between the different options available and we can add value to your business by pointing you in the right direction .

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.

Bad debt protection is available as an add on the factoring or invoice discounting. The level of bad debt protection will depend on the quality of your debtor book as the level of protection depend s on the credit insured limits available against each of your customers. As different finance companies use different insurance companies to provide their limits you wll get a variety of different opinions across the market place. An independent finance company will use a specialist insurance broker to get the best possible limit. A bank owned factoring company will as a rule use their own in house insurance to provide a non recourse facility. We are aware of one bank applying a £10k insurance against each of its customers debtors. This can work very well if you have alot of smaller businesses on your books. However the same bank is overall  applying quite low  funding limit against its customers. For example   we have seen a scenario whereby a customer had 10 regular customers that it factored with on a regular basis. A £10k insurance back limit was applied to each of these customers therefore in theory providing a total facility of £100k. However the overall facility was limited at £50k. So be careful as finance companies will give it to you on one hand and take it way with another!!!!!!

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.

Different finance companies have differing policies when it comes to credit limits for invoice discounting and factoring.  For example certain banks will not fund a debtor at more than 20% of your total turnover. Other financial institutions may be happy to fund a debtor no matter what the percentage of turnover. Recently we have seen one high street bank provide a £10k limit against all a businesses turnover. Not brilliant if your business is dealing with a few large businesses. However this could very useful if your businesses have many different customers and the outstanding balance is below £10,000.

What we recommend is that if you have been unhappy with your existing finance company as an independent finance company we can analyse your aged debtor report and work out what funding limits you may obtain with a variety of different finance companies. You could do this your self however you might find you are talking to the wrong companies. We can save you the time and the hassle and more importantly it wont cost you a penny. Give us a call today and find out how one of the UK’s leading independent business finance and invoice finance companies can help your business.

There are some very simple reasons as to why a bank would withdraw an overdraft facility. Firstly a bank will feel that they have more control over an invoice discounting or factoring facility. If a business has been in difficulties there is a trend to reduce overdrafts or even withdraw them completely. Secondly  one of the criticism that have been pointed towardsthe banks in the aftermath of the collapse in the banking system is that the banks are under capitalised. This means that  the banks were supposed to have a certain amount of cash reserves, which they didn’t. Indeed the propping up of the banking sector provided the banks with more cash however most of this cash has been used to recapitalise their balance sheets. Interestingly if a bank lends money on an overdraft they are supposed to have a greater amount of cash reserves than if they had lent the same amount of money against a factoring or invoice discounting facility.

One of  the biggest enquiries  we get is from businesses wishing to protect their working capital in the event in a reduction in overdraft. Whilst banks offer such facilities I find it very strange that a business should even contemplate an invoice finance facility with the same bank which is restricting their working capital facilities. We genuinely believe that for most financial products offered by the banks their is a far superior product offered by an independent specialist provider. Although there are so many independent factoring company, at XL Business Finance we use our expertise and experience to recommend two or maybe three funders that will best suit your requirements. As the going says one mans poison is another mans meat. It is the same with finance companies. We will take into consideration your geographic location, length of time the business has been trading, turnover , size and quality of debtor book, profitability and whether their is any previous or historic adverse credit information.

In the current economic climate it is still just as difficult for a new start  business to obtain any sort of funding. As a general rule of thumb in order to be eligible for funding from a high street bank or finance company you must have been trading for at least 3 years, be profitable, provide a good old business plan, provide inside leg measurements and of course they will need your wife and kids as security. Hey and what about the EFG funding. Does anyone know a business who has managed to secure any EFG  funding?  The good news invoice factoring is probably the  easiest form of finance available for any new start business. And that includes asset finance of which are bloody experts!

Invoice factoring which enables a business to raise cash against unpaid invoices will provide most new start business with the ability to trade within the most difficult period of any new start business. As a business raises an invoice a factoring facility will provide up to 90% of your cash immediately. When your customer pays your invoice to your factoring company they will repay the remaining 10%  of your invoice less any charges.  As a new start business you will only be offered factoring which will also provide a full credit control service and depending on the spread of your customers you may be able to obtain non recourse factoring which will offer credit insurance. It is even relatively easy to obtain funding if you adverse credit. The best plan of action here would be to be fully open in your dealings as it is better to get all those skeletons out in one go.

XL Business can help you choose the appropriate factoring company for your business. How we guide you to the right factoring company will depend on your location, the expected turnover and the particular sector of your business. Please will free to give us a call to discuss your own requirements.

Once upon a time invoice factoring was condsidered the lend of last resort. There was once a stigma surrounding factoring or invoice discounting however businesses wishing to maximise their cash flow realise that there are no better options.  Any sensible finance director or managing director will know that a bank overdraft is potentially a very dangerous funding option. All overdrafts are repayable on demand and we have seen many instances recently where once very profitable businesses have had their overdrafts withdrawn because of a poor set of trading results. This can have catastrophic consequences for the business and can even have worse consequences for the directors particularly if personal assets have been lodged as security.

Factoring or invoice discounting both maximise a businesses cash flow by releasing cash against invoices you have raised but as yet have not been paid for. The security is the actual invoice and the factoring or invoice discounting company are expert in making sure that the invoices are paid in a timely and orderly fashion. Therefore any exposure as a result personal guarantees is reduced to a minimum.  Guarantees are not taken by all finance companies . It just depends on the circumstances of each particular deal.  This has got to better than using a bank overdraft!!!

There are many forms of  products available and XL Business finance as an independent factoring company has been advising clients for many years. Whether you are looking to switch to another factoring company or you are considering using factoring for the first time XL Business Finance can provide free and impartial advice to you and your business.

Quite often we get asked to asses an existing facility and quite often we recommend that the client stays where they are. We are great believers that if it isn’t broken then don’t try to fix it. However we do believe that invoice  factoring for a small business is  very specialist market. What is the point of going to a high street bank if your turnover is only a couple of hundred thousand a year. You will be lost in a great big institution where you wont be able to speak with a decision maker and your business will be too small for anyone to care.

The good news however that there are a number of smaller independent factoring companies that specialising in serving the smaller end of the market. Their ethos is purely customer service driven and they are able to help you in a way that will seem like a breath of fresh air compared with the high street banks. These finance companies can be completely regionalized so to find out which one near you sis best for your business give us a call

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Invoice factoring need not only be for businesses with hundreds of thousands of turnover. XL Business Finance is helping businesses with turnover as low as £100,000 obtain finance from the most appropriate finance company.  

With a turnover as low as £100,000 it is very unlikely that a business will obtain confidential invoice discounting, however it may be possible to obtain a soft touch factoring facility. Not all finance companies will provide such a service so it is important that you take advice from a reputable and knowledgeable factoring broker.  A soft touch factoring facility will enable a business to maintain the majority of their credit control however the factoring will be provided on a disclosed basis and as such your customer will be aware of the factoring companies involvement.

If a full factoring service is required it is important that the most suitable finance company is chosen for your particular needs. Factoring provides a full credit control service and debt collection and as such it is very much a value added service.  As with any value added product you tend to get what you pay for.  The biggest comp-laint we hear about is the inability of certain financial institutions to collect money. What is the point of saving a few quid a month if you are not getting a proper service. Flexibility, a full on credit control service and the ability to pick up the phone and have a conversation with a decision maker is the key to a successful factoring relationship.

XL Business Finance is one of the UK’s top factoring specialist and has been advising clients on various financial solutions for over ten years