Without a doubt invoice financing is still the most buoyant and flexible form of business finance today. However there are so many different invoice financing companies and products to choose from how can you be sure that you are using the most appropriate and best value funder for your business. Luckily XL Business finance has been helping businesses for over ten years to choose the most appropriate funder.
Again Invoice financing is a generic term for factoring and invoice discounting all of which provide funding against your unpaid debtor book. Because invoice financing is secured against your debtor book it is a very flexible form of finance that grows with your business. It is fast becoming the first choice cash flow facility for many businesses replacing bank overdrafts which by comparison are restrictive in terms of proving cash and onerous in terms of security and flexibility.
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.
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.
Approach most invoice financing companies for a factoring and invoice discounting facility and as soon as they realise there is an element of contractual debt they run a mile. The good news is that there are one or two finance companies that specialise in financing contractual finance.
Invoice financing provides cash against your unpaid invoices. Most factoring and invoice discounting companies will release up to 95% of your newly created invoices immediately with the remaining 15% being paid when your customer settles the invoice in full. For small businesses that might find it difficult to obtain a bank overdraft invoice financing can provide much needed working capital. As mentioned in previous blogs not all finance providers are the same and this is even more relevant when it comes to a small business choosing the right invoice financing company for their business. XL Business Finance has been helping small businesses for over 10 years obtain the most appropriate and flexible financing solutions.
Invoice financing can provide much needed working capital however when combined with an international trade finance facility the two facilities dove tail to provide the complete funding solution. Any businesses wishing to import goods from a foreign country can do so without having to use any of their own capital provided that you have guaranteed orders in the UK. On trhe back of these orders the finance company will provide the cash to import the goods. As soon as the goods are delivered to your customers premises, you will raise an invoice. Either the customer pays immediately and the trade facility is repaid in full or you provide your customer with credit and the same finance company provides an invoice discounting or factoring facility against your invoices and the proceeds are used to pay the trade facility.
Ok so we have established over the last few blogs that as the UK emerges out of the recession that using banks for working capital funding and in particular bank overdrafts is probably not the best form of finance. However there are so many invoice financing companies available how do you know which one will suit your particular business and who will give you the best deal. There are many factors that should be taken into consideration when choosing a provider. First there is a big difference between invoice discounting companies and factoring companies. The finance companies that are good at factoring are not always good at invoice discounting and visa versa.
Invoice financing is a form of cash flow finance which can release up to 90 % of your unpaid invoices. It can take form in a variety of different variations. There are basically 3 0r 4 core products and the 50 or so finance companies offering invoice financing provide slight variation on each of the core products. Invoice financing can take form as factoring , invoice discounting , confidential invoice discounting and confidential factoring. Invoice finance has beenone of the fastest growing areas of finance in recent years and even in the current economic climate and credit crunch there are still many finance companies offering such products. At one time invoice finance was seen as a lend of last resort. This stigma has just about disappeared especially when you consider the risk of using a bank overdraft which have always been repyable on demand. Invoice financing will provide a more secure form of funding that potentially can grow as your business does. XL Business Finance has been helping and advising businesses for nearly ten years and placing them with the most appropraite finance company.
Without a doubt there are still many options when it comes to obtaining finance against your unpaid debtor book. The ability to release up to 80% of your unpaid invoices can provide a financial life line for many businesses and can provide a viable alternative to any bank finance arrangement. Invoice financing is still an area of finance where there still seems to be many finance companies in the market for writing new business however how do you know which provider is best for your particular requirements. XLBusiness Finance has been helping many businesses obtain the most appropriate factoring and invoice discounting products based on their own unique set of personal circumstances.
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.
