Asset finance leasing - XL Business finance

Arranging Lease finance

January 23rd, 2010

Arranging lease finance or asset finance is still increasingly difficult to obtain. The market for prime lending has changed considerably over the last eighteen months as the high street lenders are still taking a precautionary approach to lending. Before the credit crunch and the recession most of the high street banks had an asset finance division in addition to the core commercial banking. As the banks started to suffer losses and the availability of cash to the bank themselves began to dry up these asset finance divisions started to wind down these operations.

 From an independent brokers  point of view, before the recession most of the asset finance divisions would all take broker business. There was Lombard,  Bank of Scotland  , Yorkshire Bank and Barclays to name a few. Whereas now the banks are tending to look after their own customers and wont accept broker introduced  business. Therefore if you go to your own bank and perhaps you are not strong enough to get approval there are few high street options available. In addition some high street banks wont offer hire purchase or finance lease facilities less than £50k. HSBC is a prime example. They might agree a facility for you however it will be done a straight forward commercial loan which means taht if you go back to your bank for some further funding you risk the possibility of not being able to get further funding.

 The good news is that there are still one or two finance companies that deal exclusively with the broker market that are willing to take 3rd party business. XL Business Finance has had over ten years experience of helping such businesses. Credit is still tight to come by and as such we can add value to your business because we know exactly how to structure a deal for a finance company in order to get the best possible chance of approval. Believe you me it is worth the effort because the next tier of funders are extremely expensive!

Invoice finance in the construction industry

January 22nd, 2010

Any business which operates in the construction industry or any business which invoices stage payments as part of a contract knows how difficult it is to obtain funding . Some banks maybe prepared to offer some form of overdraft however as soon as you mention contracts to most factoring and invoice discounting companies they will run a mile. The good news is that there two finance companies providing invoice finance against applications in the construction or any industry involved in stage payments. Depending on your own particular circumstances XL business finance will help you find the most appropriate invoice finance company.

However the two finance companies are very different indeed. One is a bank owned finance company and the other is an independent finance company. The independent company  is in our opinion the leading finance company in this sector and will fund  uncertified application. It also understands that actual payments against application maybe slightly different from the money received and it also understands that VAT and PAYE may have been deducted. In our experience finance via the bank maybe a bit hit or miss. Their  headline prepayment might be higher however they will have a very strict funding limit therefore as the business grows it might be difficult to obtain increased funding. As this is one of the big banks the level of service tends to be a bit hit or miss and not all the account managers understand contractual invoicing. If payments are slightly different they will put the cash to a suspense account because it doesn’t exactly match leading to disallowed credit limits and further reduction in funding.

I addition not all their account managers will pay against uncertified applications preferring to pay against certified invoices which can delay payment further!!!

Need invoice finance advice?

January 21st, 2010

There are so many invoice finance products and companies to choose from. A quick search on the internet will reveal hundreds of finance companies all offering similar products and services. Although invoice finance is mainly about getting cash against unpaid invoices there can be a big difference between the many different companies and how they deliver their product. To make sure you get the best factoring or invoice discounting facility for your business it is advisable that you speak with a specialist independent factoring and invoice discounting broker. A good one will know the market better than any accountant and going to your bank for financial advise will be like going to your butcher for open heart surgery.

Thankfully XL Business finance has access to twenty or more factoring and invoice discounting providers. We know the market extremely well and following a brief consultation we know exactly which provider will be best suited for your own particular requirements. We will recommended two possibly three finance companies that we believe will provide the best service for your own unique set of circumstances. The good news is that this does not cost you a penny. We will get an introductory commission from the finance company. All factoring companies pay roughly the same commission so we are not tied in one any one finance company. It would be pointless introducing a business to a finance company that wont provide the best service. The most important thing is that we get you with the right finance company and that you stay with that finance company.

There are many different factors which will influence our choice of finance company. Do you need factoring or invoice discounting, geographical location is important, turnover, number of debtors, quality of debtors, debt turn, how long your business has been established and the level of profitability are all important aspects and ill have a bearing on the right finance company.

Invoice Factoring (4)

January 20th, 2010

Invoice factoring is still rone of the most buoyant forms of finance available in the UK today. There are still plenty of finance companies offering various forms of invoice finance. Unlike the asset financing and leasing market which seems to have dried up somewhat the choice and availability in the invoice factoring market appears to be plentiful with plenty of options and choices. A quick search on the internet search engines will reveal numerous finance companies offering invoice factoring. There are just so many to choose from. How do you know which product is best for your business and how do you know which invoice factoring company will be best suited ti delivering the right sort of service to your business. In short a good independent factoring broker will be well placed to advise you of the may products and services available. XL Business Finance provides a free factoring and invoice discounting service which ensures  the most suitable finance companies are recommended to your business.

OK it is free in that we will not charge you a fee however we do take an introductory commission from the finance company. We are confident that we will provide y0u with the names of  two possible finance companies that are most suited to financing your business. Unlike some independent invoice  factoring brokers we are not tied into any one particular finance company. We have access to over twenty or so different finance companies. Brae some factoring brokers ( particularily  the ones that have different finance company logos on their site) take an introductory commission just for passing the referral. Nothing else happens except you get bombarded with loads of calls. By using XL Business Finance we control the referral part of the process which keeps appointments and provision of information to a minimum. If you happen to read this blog before the end of Jan 2010 you will be entitled to a free Mars bar!!!!!!!!

New start business and confidential invoice discounting

January 19th, 2010

It is now possible for certain new start businesses to offered full confidential invoice discounting. As we know confidential invoice discounting will release up to 85% of any unpaid invoices. As invoice finance can grow with the business it is much more preferable than any bank overdraft which tends to stay at a fixed level. In addition a bank overdraft is repayable at any time therefore invoice discounting provides a much safer option in terms of stability.

Traditionally confidential invoice discounting was for businesses with turnover in excess of £1.0m however before the credit crunch many different invoice discounting were offering confidential facilities for businesses who wouldn’t normally meet the standard criteria for such a facility. Along comes the credit crunch and all of a sudden it is like going back 10 years and all you can get is factoring. From the finance company point of view factoring is allot safer product because they are able to verify the debt by phoning your customers.  This can cause a problem for certain customers firstly because they don’t like the finance companies calling their customers ( not all of them are very subtle) and secondly you may already have an adequate credit control facility in place and as such factoring could become unnecessarily expensive.

However it has become apparent that a number of the the more independent invoice discounting companies are once again beginning o relax their criteria and as such it is again possible to obtain invoice discounting whereas last year you may have only been offered factoring. This is again the case with new start businesses. So long as the directors have had experience within that sector, adequate systems and procedures will be put in place invoice discounting with certain finance companies is definitely an option. XL Business Finance has been helping and advising customer for over 10 years in such matter.

Confidential Factoring or Confidential invoice discounting?

January 18th, 2010

The advantages of being able to release up to 90% of your unpaid invoices is obvious however many business are still put off invoice finance not because they think there is still a stigma surrounding the facility but because their customers will not allow it. Therefore a traditional factoring facility is unacceptable because the finance company will need to verify most of your invoices. A traditional invoice discounting facility is normally only available to long established and profitable businesses. Therefore a good chunk of businesses may find themselves caught between a rock and a hard stone. The good news help is hand and XL Business finance has access to a number of finance compasnies and creative finance products that could fill a few gaps in the market.

Many businesses will not be eligible for confidential invoice discounting because they haven’t been trading long enough, turnover isn’t big enough, they are not profitable enough,  they have gone through a prepacked administration or their existing factoring company has given them notice for breach of the facilities. From the finance companies point of few confidential invoice discounting is far more risky because it is not always possible to verify the debt and is therefore more open to fraudulent activity.

However one finance company XL business Finance deals with are prepared to give customers that don’t meet the normal criteria on invoice discounting providing a facility provided there a good systems in place. From a management point of view invoice discounting is less time consuming and potentially more profitable. For the first six months or so they may run a shadow ledger to make sure the facility is being run properly.

Confidential factoring provided by a different finance company is a half way house. You will be given your own dedicated credit controller who operates in the name of your business to ensure all the invoices are collected in the normal way. You will also be your own telephone number providing all the advantages of a full factoring facility with the confidentiality certain businesses require.

 

 

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Business Financing for a new start business

January 17th, 2010

There are so many business financing options available for a new start business.  Nearly all the banks can offer a plethora of funding options however which ones are best suited for a new start business.

At XL Business Finance we have been helping many new start businesses for over 10 years and our experience and expertise ensure that a business is provided with the very best business finance options.

Understandably many new starts are drawn to their banks whom can potentially offer  equipment and asset finance, commercial mortgages, overdrafts as well as  factoring and invoice discounting facilities.

It is tempting to go with the bank who are offering a packaged deal however in doing so you might be storing up future difficulties when it comes to obtaining further credit in the future. Banks are very good at giving it to you with one hand and then taking it away with another. For example, we have seen many instances whereby the bank will offer a small overdraft facility in order to win the factoring business. All that happens is that the customer ends up with reduced limits on the factoring facility to counterbalance the overdraft.

In addition we have seen these initial overdrafts being completely withdrawn after a relatively short period of time. The business would have had far better cash flow if they had gone with a more flexible factoring company .

It may also be that a bank will offer you finance to purchase some assets or equipment. They mat take additional security to provide the funding. These deals may seem very attractive in terms of the interest costs however these assets may just as well be financed via a third party leasing company. A little further down the line you find yourself asking the bank for some fundeing  for something which can’t be leased but the bank are fully exposed.

We would recommend that if  third party finance is available at the start then this should be seriously considered so you don’t have all your eggs in one basket.

Leasing Printing Machinery

January 16th, 2010

As we know printing equipment can be categorised into two types. Digital high tech equipment and traditional equipment such as litho presses. There are a number of specialist print finance companies currently lending money and you wold think it would be easy obtaining finance as they know the market. However it is not as simple as that because different finance companies have differing views of  the suitability of  digital and non digital as security for a finance lease oir a hire purchase agreement. XL Business Finance has an area of expertise in the print sector and has been helping many printing businesses arrange finance for over ten years.

For example it is unlikely you will get a print finance specialist to finance an expensive  digital printer. A print finance company is more interested in the residual value of the equipment and their exit route if they  such a machine came back to them in a distress situation. Print finance companies know the litho market and a certain degree the flexo market very well and as such tend to stick to financing these sorts of machines.

It is therefore more likely you will get finance for a digital piece of kit or a non ltho piece of kit from a traditional balance sheet finance company. So long as we can evidence serviceability, there is no adverse information and your business is profitable than you have a good chance of geting finance approved.

The problem is when a business that has been struggling wishes to buy digital kit which is perceived as having very little security. There isn’t enough value in the kit to get the print finance companies interested and the balance sheet isn strong enough to justify an advance from a high street bank owned finance company. Potentially the only way is to provide additional security by taking a charge over existing kit or even property.

invoice finance or overdraft

January 15th, 2010

Without a doubt we would recommend invoice finance over a bank overdraft any day of the week. There are obviously exceptions of course. Invoice finance provides 80% of your unpaid invoices as soon as you have raised your invoice. It provides a flexible approach to your working capital requirements. Obviously this wont work if you are getting cash on delivery or on the point of sale. Uner these circumstances you would need an overdraft facility to provide you with adequate working capital.

There are many advantages to invoice finance compared with a bank overdraft. Overdrafts are normally secured aginst property and are fixed at a set amount with little scope for increasing as your business grows. More importantly it should be noted that a bank overdraft is repayable on demand. If your business takes a turn for the worse potentially the overdraft can be withdrawn without notice. Unfortunately in the current economic climate we have seen happen all too often. This will never happen with an invoice finance facility.

Invoice finance can be provided by way of a number of products. Factoring in addition to providing cash against unpaid invoices provides a credit control facility. Invoice discounting can be provided on a confidential basis and as such only provides a working capital facility. Invoice discounting is suitable for more established businesses who will have their own credit control facilities in place. Different finance companies provide slight variations on these two products but in main these are the two most common invoice finance products.

A quick search on google will reveal hundreds of potential finance companies. Banks are good at invoice discounting however there are independent companies that are capable of providing an equally acceptance product. As a rule of thumb independents are better at providing factoring products. XL Business Finance can help you find the most appropriate finance company.

Is it Possible to get overpayments with invoice factoring

January 14th, 2010

Invoice factoring provides cash against unpaid invoices. Most finance companies will pay up to 80% of unpaid invoices and give you credit of up to 90 days. Before the credit crunch it may have been possible to obtain up to 90% of your  sales ledger however this is very uncommon in the the era of  very cautionary finance companies. When choosing an invoice factoring company it is important to take into consideration how flexible they may or may not be.

 Imagine coming to the month end and there are not quite enough invoices in the pipeline to draw down enough cash to pay the wages. However you have a few big  jobs around the corner and you know you will catch up the following week. If you are with a bank based factoring or invoice discounting company and you need a bit of extra cash then good luck trying to find a decision maker. If you have chosen a smaller and sometimes independent factoring company you will have a much greater chance of getting an overpayment. At XL Business Finance we do have clients who have moved to bank based factoring companies and have moved back to smaller independent for this very reason. They know at the end of the month that if here are going to be any short term cash flow problems they need a flexible finance company that they know that after one phone call and no more than 24 hours later they have some extra cash.

An independent factoring company is one that is not bank owned and therefore does not have the same red tape and bureaucratic hierarchy to go through to get decision done. They have usually been set up by quality guys that have been within the factoring and invoice discounting industry for many years. The MD will sit in the same office as all the other staff so special requests and help can be obtained by walking straight into his or her office.

 
 
 

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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