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Invoice discounting or factoring ?

Invoice discounting are two completely different funding products. Although most finance companies will offer both facilities not all finance companies are great at doing both. Altough both funding products will release cash against unpaid invoices and potentially give you the financial freedom to grow or develop or indeed just survive in the current economic climate. Factoring is traditionally provided with full credit control  whereas invoice discounting is provided on a confidential basis.

Factoring can be provided for businesses with turnover as little as £80,000. In order to be eligible for invoice discounting turnover will need to be at least £250k. Up until a few years ago unless your business had turnover of at least £1.0m then there would be absolutely no chance of obtaining an invoice discounting facility. However when different finance companies were vying for business in the good old days before the credit crunch this minimum turnover became lower and lower.

Invoice discounting is provided on a confidential basis which means your customers are unaware that the finance company is providing funding against yourinvoices. Therefore from the funders point of view the facility is more risky than factoring as potentially the facility is more open to abuse in terms of fraud and raising fictitious invoices. Therefore a business must be profitable ,long established  and have well established credit control procedures in order to qualify for invoice discounting.

Factoring is always provided on a disclosed basis and your customers will be aware that the finance company is providing funding against your invoices. More often than not the factoring company will provide a full credit control service. Therefore the finance company has a much greater grasp and control on your finances and as such they are happy to provide funding for new start businesses , businesses which are loss making and businesses which have a relatively small turnover.

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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.

 

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