Asset finance leasing - XL Business finance

Construction finance for contractors

November 3rd, 2010

One of the most common enquiries we get is for contract businesses looking for additional working capital to expand their businesses. The problem is that they have been to the bank and been refused an overdraft and they have been told they are ineligible for factoring or invoice discounting due to the nature of their contracts. The good news there are a number of invoice finance companies that other construction finance or contract finance.

We had such an enquiry just yesterday. As per normal the enquiry was for a different  however unsuitable form of finance. The enquirer had been told by a number of different sources that they were not eleigle for invoice finance and as such they had been trawling the inter net for business loans and approaching the banks for overdrafts. As we know the banks are\ still being over cautious resulting in a number of dead end enquires.

XL Business Finance with our ten years of experience in this sector was able to introduce a number of specialist funders that would be willing to fund invoices raised against contracts. Hopefully this will give the business the much needed working capital to grow and expand the business and take on more available contracts.

Stocking Finance explained

November 2nd, 2010

There are a number of variety of stocking finance options and depending on your particular circumstances there are a number of different products. Depending upon the the finance company you approach these different products may be called something completely different from one finance company to another.

Firstly let me explain we are unaware of any financial institution that offers stocking on a stand alone basis. It is usually provided with another finance product.

The most common form of stocking finance is provided on the back of a factoring or invoice discounting facility. A true stocking facility will provided a a percentage of the total monthly stock on a rolling contract. Beware certain invoice finance companies offer stocking finance but t is only to provide additional security to enable them 10% of your debtor book. Whilst funding in this instance  is technically stocking finance the over payment will be reduced over a period of time. There are only a few invoice finance companies that offer the full rolling stock facility and therefore it is worth giving us a call to check.

Stock finance may also be provided as part of a trade finance agreement. Where a business has confirmed orders it may be possible to obtain 100% funding from start to finish. This can either be on a domestic basis or on an international basis. An international trade finance facility will enable a business to import goods and where there are confirmed orders finance can be obtained from start to finish. When the goods are delivered to your customers premises a factoring or invoice finance facility will dovetail with the trade finance facility and provide seamless funding. Therefore technically speak international trade and domestic trade finance could be viewed as stocking finance as well

Cash Flow Loans Explained

November 1st, 2010

A traditional cash flow loan from a banks point of view would be based on the turnover and profitability of a business. Before the recession cash flow loans were a prelevent form of bank lending.  They were often used in management buy outs to raise cash to buy the businesses along with other purposes. It was not out of the question to raise funds many times greater than the actual value of the tangible assets of the business.

During a buoyant economy this kind of lending is absolutely fine however as soon as things slow down, as they did recently, serviceability may become an issue and as such the banks find themselves with large loans to businesses with very little or no security. It is no wonder the banks have had such a slating recently for lending on this basis. The recession hits and the banks no longer lend on this basis and are accused of not lending any money. It appears to me that they dammed if they do and dammed if the don’t.

The alternative to cash flow lending is asset based lending whereby a bank or financial institution lend against the asset of the business. These are predominantly invoice finance companies that will lend up to 90% of a businesses debtor book, provide a commercial mortgage, lend approx 50% against any unencumbered machinery and also have the ability to lend against stock and in  certain circumstances provide international trade finance.

Whilst a bank has the ability to provide asset based lending they don’t tend to have the expertise as some of the specialist lenders and as such it is often worthwhile speaking to an independent business finance specialist to see what alternatives are available. XL Business has over 10 years experience in helping businesses in this often overcomplicated sector of business finance.

Need a commercial mortgage?

October 26th, 2010

XL Business Finance has been helping business for over 10 years with many different areas of business finance. Over the years we have developed a knowledge and expertise in may areas including asset finance, invoice finance and commercial mortgages. However obtaining a commercial mortgage in the current climate is still probably one of the most difficult things to do especially when approaching your own commercial high street bank. Thankfully at XL Business Finance we have a few alternative funders that maybe able to help.

The problem with the high street banks is that they are hung up with the serviceability of the transaction. And unless you have trading profitably for more than 3 years with 3 years positive accounts being produced. It doesn’t matter about the value of the property or the amount of deposit being put into the transaction unless you are quality tenant it wont fly with the bank. Many of these high street banks say they do commercial property but in reality they put up as many obstacles in the way as possible to prevent the deal going forward.

However there are one or two alternatives. There are still one or two London based merchant banks offering funding for the right deal and in deed some of the asset based lenders are starting to dip their toes back in the market ( for the right kind of property)

In addition there are still a number of bridging companies offering funding however the bridging companies tend to be expensive and as such you should be fairly confident as to your exit route as these should only be used as a temporary stop gap.

If you need any help or advise at al about commercial mortgages it is free to pick up the phone. We are a results driven business and unless we can add value to your particular scenario we will just give ou best advise

Factoring and bad debt protection

October 25th, 2010

In the current economic climate bad debt protection or credit insurance will provide much needed protection and comfort should any of your customers go bust. However not all factoring companies offer the same level of protection. Therefore when choosing a factoring company it is important that you take this into consideration.

It must also be remembered that most most insurance and bad debt protection will only pay out when a customer goes bust. If for some reason your customer wont pay or can’t pay but hasn’t gone bust then it wont pay out. This is worth bearing in mind.

A bank based factoring  company may provide insurance from their own in house insurance company. This may be provide a blanket insurance cover if their are any future problems. However this may be further complicated  by the exposure to any one customer. If your exposure is more than say 20% for one customer than credit insurance may be restricted.

An independent factoring company don’t use their own in house insurance but use independent insurance agencies and as such different funders may use different insurance companies and as such levels of insurance from one company to another may vary considerably. It all depends on what their experiences are in varying sectors.

Therefore worth gettting an independent factoring broker to search the market

How do I refinance existing plant and machiery

October 22nd, 2010

Without a doubt we are in for a difficult 12 months. It is difficult to see how the the recently government announced cost cutting will not have a negative effect on the economy. As a business the most important thing will be to protect itscash flow. It is also important not to to be at the beck and call of your clearing bank ( or worse). Anyone with a large overdraft may find themselves in a tricky position. One way to help protect your cash flow is to refinance existing plant and machinery. Admittedly this will only work for businesses which operate some heavy duty equipment however it is an option open to many businesses that may need some extra cash.

Refinancing of existing plant and machinery is a very specialist sector and one that is not normally undertaken by the high street banks. XL Business Finance has over 10 years experience of arranging such finance and as such we will undoubtedly be able to help your find the best possible financing options. Most specialist asset finance companies have very similar pricing structures so the thing that differentiates them is their appetite for a particular sector. Certain asset based lenders are very good at print but not at engineering and so on and so forth. They all use slightly different means to value kit so as an independent broker we will know which lender is best at valuing what sort of kit. This level of expertise and knowledge will help you save time and expense in obtaining the best deal.

Sourcing Equipment Finance

October 21st, 2010

Any business wishing to organise equipment finance for new or used capital purchases may find that the banks not very accommodating at the moment. Any Managing Director or Finance Director may possibly not know who to turn to . It also appears that the choice of finance company appears to be continually diminishing. The good news is that XL Business Finance has the expertise and experience to source hire purchase and finance lease facilities from a variety of lesser know finance house and independent companies.

In addition even if the bank are offering a facility it is advisable to consider an alternative  hire purchase or finance lease deal provided by a third party funder. The banks tend to offer funding by way of a commercial loan. As they will probably not secure the loan against the equipment itself they will only lend against the strength of the balance sheet or the amount of available security. This may have implications for raising finance at future dates as valuable funding lines may have been exhausted. Therefore if the equipment to be purchased has some value, it is Durable, Identifiable and Moveable than it maybe possible to organise third party funding

XL Business Finance has many years experience in arranging lease facilities for all kind of things including, computers, printers, office furniture, racking are but to name a few

International Invoice Discounting

October 20th, 2010

In this challenging economic climate the high streets banks appetite to write international invoice discounting deals has declined somewhat. In fact there are very few invoice discounting providers that will provide a true international invoice finance facility. The good news is that there are still a number of lesser known funders willing to assist in this very difficult market.

As an independent finance company we have been advising businesses for over 10 years as to which finance company will suit their particular requirements. There are many different factors which will need to be taken into consideration when making a recommendation. For example, a particular invoice discounting company maybe very comfortable in the SME market whereas once a business gets into the multi million turnover bracket there are a few foreign banks that may be able to provide a funding arrangement. It is important that you contact someone like ourselves because a finance company wishing  to write business only a few months ago maybe being restricted funds today and as such their terms and conditions may not be as favourable as rather than say no they price themselves out of the deal.

As we know no finance institution admits being skint and as such they go through the motions, promise the earth and ultimately deliver nothing. At XL Business Finance we no exactly which finance company is strong in our particular sector and as such we add vale by making sure you speak to the correct finance company sooner rather than later!!

Guide to Factoring

October 19th, 2010

A quick search of the world wide web will reveal hundreds of thousands of companies offering factoring services. But how do you know which company or service to go for.

Some simple advice will hopefully point you in the right direction. If full factoring is required with full credit control than it is widely believed and  recommended that a specialist or independent factoring  company is better than a bank owned factoring company. Why? Because these smaller companies have been set up with offering factoring and factoring only. They are usually big enough to provide the right level of funding however they are small enough to care about your business and provide the appropriate level of  support and flexibility which is so much lacking with some of the bank based lending services.

Which factoring company is best for you depends on the nature of your debtor book, how long your business has been established, how profitable your business is, the level of turnover and your geographic location. There are many a factoring broker that after only a brief discussion will be able to quickly determine which two or three funders are best for your particular businesses requirements. And the good thing is that the service is usually free. A broker will usually take an introductory commission from the factoring company. All lenders offer commissions to brokers so you can be assured that you will be introduced to the best possible funder

XL Business Finance has been helping business find the best factoring provider for over 10 years and as such we are are in an excellent position to advise and help your business provide the most appropriate ffactoring partner!

Refinancing existing plant and machinery for one off projects

October 18th, 2010

As we know the banks are still being difficult when it comes to raising cash for bespoke or one off projects. Whilst you may be able to justify a project from a future profitability point of view unless you have got adequate security lodged with the banks it is more than likely they wont be interested.

At XL Business Finance we are seeing an increase in enquiries  for business finance from decent and profitable business needing additional cash. An example was a engineering business’s needing £100k to help with a deposit on a new machine and also to  help with the the reorganisation of the factory. The business was able to refinance existing plant  and machinery to help raise the additional cash required.

Refinance of existing machinery is a very specialist market and whilst the high street banks occasionally surprise us in terms of what they do it is extremely unlikely they will offer refinance in its purest form. A business that has plenty of equity in a commercial property or has excess headroom in the debtor book is and is  offered refinance is only potentially tying up further forms of available finance. A remortgage to release cash or an invoice finance facility by way of factoring or invoice discounting are all valuable options and should be left open for future needs

 
 
 

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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