Asset finance leasing - XL Business finance

Invoice discounting for a phoenix company

February 5th, 2010

There are a vast number of businesses going through a prepacked administration process at the moment. These are commonly known as a phoenix company. Agree or disagree with the concept they are an option open to many struggling businesses and are widely being recommended by many insolvency practitioners. However obtaining invoice  finance coming out of the other side might not be as straight forward as one might think. It is very unlikely that a bank will finance a phoenix company. There are a few independent finance companies that will finance a phoenix company however the majority will offer factoring or disclosed invoice discounting. There are only one or two finance companies offering confidential invoice finance facilities. Whether you are offered a confidential facility depends upon how you have conducted t your previous business. All factoring and invoice discounting will take a reference from any previous invoice finance company. In a nut shell if the old factoring or invoice discounting has managed to collect out the old debt you have a much greater chance of being offered a confidential facility. If however the old finance company has struggled to collect out the old debt then you have less chance of being offered a confidential facility.

Obtaning Business Finance in a Summer Recovery?

February 3rd, 2010

According to a recent quarterly business  index economic survey the general feeling amongst North West Businesses is that their is an air of optimism and enthusiasm about the future. However many of the businesses feel that trading conditions are worse than they were 12 months ago.

In addition 55 percent of the businesses feel that the economy will have recovery by the summer of this year. However one in five feel that it will be two years before the economy fully recovers suggesting that certain sectors of the economy have been hard hit.

This Business factors index has been provided by Bibby Financial services. The index tracks small businesses turnover since 2007 and the trends and information have be collated with the results of over 300 business interviews.

The optimism must be offered with caution. One in five feel conditions are worse than they were 12 months ago. In addition many have had to take cost cutting measures. And one in five don’t think the economy will ave recovered in two years.

Firms in the North West with many involved in Manufacturing have had a tough time during the recession and while we don’t expect an immediate recovery it is clear that many businesses have experienced a difficult few months. Although 2010 ha already provided a number of challenges such as the adverse weather conditions  a weak pound is fueling export growth and as such confidence is slowly starting to improve. It suggests that moving forward business are optimistic about their prospects of a recovery.

The upshot is  that it will continue to be difficult to obtain business finance. However XL Business Finance has experience of providing innovative finance solutions whether it be equipment finance refinance of existing equipment. We are also vastly experienced in providing invoice finance solutions whether it be factoring or invoice discounting. Give us a ring a ding ding.

Protect your cash flow with factoring

February 2nd, 2010

Still one of the biggest complaints we have from customers is the length of time it is taking their customers to pay. Fr0m the smallest of companies to the  the biggest PLCs the word on the street is that businesses are taking longer to settle their debts. Debt turn is increasing causing further misery on already cash strapped businesses. The good news is that factoring with the right finance company will not only release up to 85% of your unpaid invoices it will also provide a credit control facility whereby the finance chase your debts on your behalf.

Beware though not all factoringcompanies are the same. When credit terms are being stretched to the limit it is important that you get a factoring company that has a reputation for collecting invoices quickly, professionally and efficiently. You ill be surprised that there is a massive difference between service between invoice finance companies. For example many og the high street bank based factoring companies will nly chase your top 3 companies the leaving the rest to be chased by letter. No wonder some of the high street banks can do it so cheaply. Remember factoring is a value added product and by a certain degree you get what you pay for.

Other factors also needed to be taken into account. For example some the largest based factoring companies  will have their credit control in one town, their payment centre in another end of the country and their sales office in timbuktoo. How can they possibly provide an efficient service. In a nut shell they don’t . Monies get paid to suspense accounts while they run around trying to work out where they need to appropriate the cash.

To find out which invoice factoring company will be best for your business give Managing Director Mark Redman a call on 07748 635 206 24/7.

Business Financing with Adverse Credit

February 1st, 2010

Although we are officially out of the recession i firmly believe the economy is still on the edge. As such it will be a long time before banks and high street finance companiesgo back to their cavalier days of lending money to any tom dick and harry. It is bad enough getting finance with a clean credit history and even more difficult if you have any adverse credit. this doesnt mean you wont get finance however you can expect to pay more in terms of interest rates and you will also find the security required will be more onerous.

Luckily XL Business Finance has been helping business for many years with all kinds of business financing requirements. We know how to structure a finance proposal to ensure you have the best possible chance of success. We can very quickly find any adverse data recorded against a limited company and it is advisable to get copies of satisfaction certificates or confirmation of settlements in advance of the application. At very least we need to provide an explanation as to how the adverse info came about and what the plans are if any to address the situation.

If as a director of a newly formed limited company or a transaction which requires the provision of a personal guarantee any finance company will carry out a credit check on you personally. They will need permission of course and if you approach more than one finance company this may leave multiple searches and potentially adversely affect your personal credit score. If you are going to be undertaking a round robin of the UK based leasing and invoice discounting companies we recommend that you obtain your own personal credit reference report. This is cheap and easy to do. If you cant be bothered than we can do it but we will require written confirmation to undertake the search on your behalf.

 

 

 

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Factoring Contractual Invoices

January 29th, 2010

Following a recent blog refinancing contractual invoices please find below some summary pointers re factoring and invoice discounting of contractual debt.

Release of funds against uncertified invoices

Confidential. Ie customers are unaware of the finance companies involvement

Funding complimentary with most industry contracts

Dedicated specialist management team sales/operation including QS resource

Funding available to su[pport SMEs

Contractors from start up to £50m turnover

Funding requirement up to £3.0m

Most industry sectors

Growing companies with additional working capital needs

Often operating on restrictive bank facilities

 

XL Business Fiannce has first hand experience  of helping business organise contractual invoice financing. Give us a calltoday to find out how we can help you

How to choose an invoice financing company

January 29th, 2010

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.

Although both financeproducts will release cash against unpaid invoices of up to 80% factoring is more more of a service orientated product providing credit control as an added benefit. The idea is that you outsource this to the factoring company who will chase your customers and make sure the cash comes back to the business in a timely fashion. The cost of the factoring service is minimal compared with employing a full time credit controller. However with factoring cheapest is not always best. Although there isn’t a massive amount of difference between costs you do tend to get what you pay for. If you pay peanuts for a facility you will probably get monkeys chasing your customers if they can be bothered at all.

The service aspect is less important when it comes to invoice discounting however the bigger the financial institution the further you are away from a decision maker there if you need some flexibility a smaller company can provide quicker turnarounds. Confidential invoice discounting as it suggests is kept secret from your customers and it provides a working capital facility that unlike a bank overdraft grows with your business.

Why Invoice Factoring is better than a bank overdraft

January 27th, 2010

Hopefully now that we are out of the recession we will once again start to see businesses grow and to flourish. The benefits of invoice factoring during a period of growth are obvious however many businesses will be tempted to go down the overdraft route which in the long term may restrict a businesses cash flow and ability to operate from a liquidity point of view. It is also important that we choose the right factoring or invoice discounting company because not all of them are the same and they don’t offer the same level of funding and flexibility.

The two main problems with bank overdraft the level of the facility is often restricted by the amount of security available. A token overdraft facility without providing additional security  may be available depending upon the level of profitability however more often than not it is never enough. Therefore as a business grows and you need to increase the amount of working capital it may be difficult to obtain an increase. Secondly overdrafts are repayable on demand. Until the recession I don’t think anyone believed the bank would pull overdrafts however during the credit crunch and the recession the banks have shown their true colours. We have heard horror stories about the banks withdrawing overdrafts and forcing companies into administration. With factoring or invoice discounting, so long as you don’t breach the terms of the facility it is not possible for the facility to be withdrawn. And even if you breach the terms of the facility it is more likely that your factoring or invoice discounting provider will work with you to a satisfactory solution.  It is therefore important that you choose your factoring or invoice discounting company carefully to make sure they are approachable and potentially flexible. It is more likely this will not be a bank owned provider but this doesn’t mean a facility will be more expensive.

Protect your cash flow with invoice discounting

January 26th, 2010

News on the high street today is that we are finally out of the recession. This is great news however don’t expect the banks to suddenly ease up on their underwriting criteria. We believe that it will be many months possibly years before the banks get back to where we were before all this kicked off.

Hopefully we will see businesses once again seeing an increase in turnover and as a result more profitable times ahead. Any increase in turnover will undoubtedly see an increase in working capital requirement. Do you really want to rely on the bank overdraft to provide the necessary working capital for your business? I don’t think so. While a business is expanding invoice discounting will provide the perfect cash flow finance facility that will grow with your business.

XL Business Finance has been helping businesses for over 10 years with their invoice discounting and factoring needs. Both are forms of invoice financing that will release up to 85% of unpaid invoices immediately. Providing there are no added complications to your business factoring or invoice discounting facilities can be up and running in a couple of days.

Although an overall funding limit will be set against your business this is reviewed on a regular basis and will grow as your business expands. As and when your customers pay you typically in 90 days from the date of the invoice the proceeds are used to repay the initial 85% advance and the remaining 15% is paid back to your business less an interest payment and a service fee. Interest is charged at a percentage over base rate or Finance House Base Rate and the service fee can range from 0.2% of turnover to 2.5 % of turnover depending on the whether you are utilising factoring or invoice discounting.

Both products are excellent for a businesses cash flow and we can help you obtain the most appropriate funding product.

Credit limits for factoring finance

January 25th, 2010

One of the biggest issues facing small businesses in the current financial climate isthe lack of funding against certain customers. It is all well and good obtaining a factoring facility with a headline 95% prepayment if the finance company restricts funding against certain customers. Unfortunately many businesses will place that invoice finance with a factoring company promising the earth however if you are not careful you will end up with a finance company that potentially will not deliver.

When choosing a factoring comapny it is well worth asking the potential funder what credit limits they will place against your top ten customes. You will be surprised how this will vary across the number of available factoring companies. XL Business Finance has ten years experience of helping businesses choosing the right finance company and as such we can add value to your business by doing all the hard work.

In addition it is worth considering the overall credit limit. A bank owned factoring company although may offer a cheaper facility they are less likely to increase the overall funding limit as quick as an independent factoring company. Therefore as the turnover of the business increases you may find that funding is restricted. A potential customer told us recently that he wished he had chosen a more flexible bur only slightly more expensive independent company rather than the slightly cheaper less flexible bank based factorig company. A change of factoring company resulted in a much increased availability and more cash which massively helped the cash flow and performance of the business.

As discussed in previous blogs there are many criteria we will consider when choosing the right finance comapny. Size, location, quality of the debtor book, profitability, length of time established and market sectoir are all important factors.

Business Finance for MBOs

January 24th, 2010

There are two ways of obtaining business  finance for MBOs. Firstly banks can do cash flow lends or an asset based lender can finance the assets within the business to provide the cash. The problem with banks is that during the recession they have had their fingers burnt with cash flow lends. Significant amounts of money are lent against the future profitability of the business. There can be potentially little security for the banks and  it easy to see why the banks have been writing off significant amounts of bad debt. During 2009 banks were doing hardly any cash flow lends however during 2010 we can expect this to increase as the economic recovery start to take effect and the banks relax their cautious underwriting approach.

Structured lending or asset based lending takes a slightly different approach to providing loan facilities. Asset based lending usually starts with an invoice discounting facility which will release up to 90% of a businesses unpaid invoices.  On the back of this it might be possible to obtain some form of revolving stocking facility typically at 50% of  the value of the stock. An asset based lender will also advance an amount against the value of the assets probably around 70% of the forced sale value. Money is advanced typically with a 3 year pay back. Certain finance companies also provide Enterprise Finance Guarantee Funding usually at the amount equivalent to any directors contribution to the business.

The problem with both these two forms of financing is that you are relying on one finance provider and as such having eggs all in one basket will leave the funder with an awful lot of control over your business. Whilst it is not possible to split stocking finance away from the invoice discounting it is certainly possible to use a unrelated leasing company to provide funding against plant and machinery. Refinancing existing machinery is relatively easy to do provided there is some value in the kit.

 
 
 

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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