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Factoring with VAT and PAYE arrears

As one of the UK ‘s leading independent finance brokers we have recently been asked to look at a number of factoring deals whereby  the customer has had some serious financial difficulties leading to VAT and PAYE arrears. At least one of these businesses was with another factoring company and at least one had no form of cash flow finance apart from a small bank overdraft. XL Businesses finance in both cases was able to find a flexible and sympathetic finance company.

With factoring it is possible to immediately release up to 90% of unpaid invoices. However there are so many finance companies offering these facilities. If your business has been struggling for whatever reason it is always best to get these issues out in the open. The worst thing you can do is is not disclose the full extent of many problems because most finance companies will discover any problems for themselves. This will rightly put the finance company on the back foot as they will view you and your business with an air suspicion.

VAT and Vat arrears is becoming more and more common place and whilst this is not ideal this doesn’t automatically exclude you from debtor finance. You might as well forget about finance with a high street bank and if you are already factoring or invoice discounting with a bank based factoring company you will probably find you have an unsympathetic approach from your bank.  This may result in reduced credit limits on individual customers and the   overall funding limit being reduced which obviously increases the problem further.

A more flexible approach from an independent factoring company can often result in more cash.  In addition there   are other financing options which can often help with cash flow. If your business operates heavy plant and machinery and industrial equipment a new invoice finance provider combined with refinancing of existing plant and machinery can provide much needed cash flow.

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