Asset finance leasing - XL Business finance

Invoice Discounting and bad debt protection

April 6th, 2011

It is commonly thought that bad debt protection or credit insurance can only be provided by the the incumbent invoice discounting or factoring company. It is a little known fact that credit insurance can be provided by an independent third party.

Often the bolt on products provided by banks and high street factoring and invoice discounting companies can be expensive and provide inferior cover. An independent can often provided greater levels of cover for the same customers , at a lower cost and with more protection. As far as we are aware there is only one or two high street finance companies that provide bad debt protection in the event of a protracted claim. Most high street funders only pay out in the event of insolvency which is in contrast to most independent insurance companies that as a matter of course provide cover in the event of a protracted dispute. Worth comparing then

Factoring for a new start business

April 5th, 2011

In theory obtaining a factoring facility for a new start business should be a relatively easy process. However we would advise that you consider a specialist factoring company that isn’t necessarily attached to a high street bank. Most finance companies will offer a facility providing that your debtors are of a decent nature. If you are starting off we only one or two customers then it is important that you obtain credit insurance. If your one and only customer were to go bust this would have disastrous consequences for your business and will potentially leave you personally exposed as you will have been asked to provide personal guarantees.

Obtaining the cheapest leasing and hire purchase rates

April 4th, 2011

Obtaining the cheapest leasing and hire purchase  rates depends not only depends on the strength of the covenant but also on the quality of the information provided. As with any transaction the easier you make it for an underwriter to understand the proposition the more chance you have getting a deal agreed in the first place and  therefore the better the chance of getting a decent rate.

Therefore with any transaction a full set of audited accounts should be provided, most recent mangement accountss, 3 months bank statrements, details of any finance agreements coming to the end of the agreement and a clear rational will also help

Beware of refactoring charges

April 3rd, 2011

The most common recourse period offered by a factoring company is 90 days. If at the end of 90 days and your customer hasn’t paid their invoice many factoring companies charge a refactoring charge which can be anything from 0 .25% to 2% of the outstanding invoice. Ouch!  Most factoring companies will not even mention this but leave it the small print. Call me cynical but there seems to be an incentive not to collect your invoices in time. If you are switching to factoring make sure that you choose business which as a good reputation and has the ability to collect payments quickly and efficiently. A tip small independents tend to be better at this than high street banks.

Replacing an overdraft with invoice finance

April 2nd, 2011

We are still seeing so many businesses struggling for cash flow with inadequate working capital facilities and replacing their bank overdrafts with invoice finance. Bank overdrafts are not designed to grow as a business expands and believe it or not there are many businesses out there that seemed to have turned the corner. This seems very much to be the case in the manufacturing and engineering sector which seems to be very very buoyant at the moment. Invoice finance by either factoring or invoice discounting can release cash against 85% of a businesses unpaid invoices. In many instances this can create cash far in excess of any bank overdraft facility is capable of doing.

XL Business Finance sells to Middle Eastern investors for £300M

April 1st, 2011

Middle Eastern investors have reportedly purchased XL Business Finance for £300m! Due to the dwindling oil resources in the middle east a consortium of investors feel the future is with asset based lending in the UK and have teamed up with XL Business Finance as their chosen funding partner. A signing on fee of a cool £50m is reported to have been negotiated for XL Business Finance founder and owner Mark Redman. A not such a daft fee considering the fee paid recently by Chelsea Football Club for Torress. At the time of press release Mark Redman was unavailable for comment as he has apparently done one to some boiling hot holiday destination  and never to return. Dream on!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Confidential Factoring Explained

March 31st, 2011

The previous blog mentioned a business that required invoice financing for contractual debt. Where there is a certain amount of contractual debt the business is deemed to be more risky and therefore the finance company will require a more control over the facility. Invoice discounting is risk because the finance company has no control over the invoicing and factoring is not always preferable for many business because they would prefer a confidential facility. Confidential factoring is a half way house. A dedicated credit controller chases your customers in you name with a dedicated telephone number. Whilst it is a compromise it can be a costly funding arrangement however it does give some businesses an option which they would oif otherwise had.

Factoring Contractual Debt

March 30th, 2011

99% of UK based independent and bank based factoring companies will run a mile when they see that a business supplier terms and conditions are deemed to be slightly contractual. Unless you operate on a sale and forget basis it is worth  ironing out these issues from the start. If a supplier agreement is place that could be construed as contractual it is always worth getting your supplier terms checked out. XL Business Finance recently helped a very profitable business replace a bank overdraft with an invoice discounting facility. Although the business was actually getting 4 quotes only one finance company was able to fund contractual debt allot of time would have been saved at the start of the process if this had been know.

Bank Loan or Hire Purchase

March 29th, 2011

It is becoming increasingly common for high street banks not to offer hire purchase or finance lease facilities especially for transactions sub £50k and even sub £200k with one bank. Although your bank may offer funding  for purchasing plant or machinery they are increasingly doing so by term loans. These loans are not necessarily secured against the assets being purchased but are agreed based on the trading performance of the business and security such as land already being in place. Although you may get a slightly cheaper rate than by going to an independent asset finance broker you run the possibility of tying up future lines and overexposing your business too much with one financial institution. If you can do we would recommended spreading the risk about!

Will my bank give me the best asset finance deal?

March 28th, 2011

Other than a businesses own bank there are still only a few independent asset finance companies offering hire purchase and finance lease facilities. And depending upon which bank you are with you might not get offered asset finance at all. If a bank wants to deal with you then you will get some of the best deals possible. However do you really want to tie up valuable banking lines which may restrict your future ability to obtain funding. If you can get funding via a third party funder it is always advisable to spread it around a bit. You may have to jump through a few more hoops but it will certainly be worth it!

 
 
 

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.

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XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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