Asset finance leasing - XL Business finance

Invoice factoring and overpayments

February 9th, 2010

We all know that an invoice factoring can provide immediate cash of  up to 85% of unpaid invoices. This provides valuable cash and working capital when a bank overdraft might not provide enough of a working capital facility. However there are instances when this might not be enough. Depednding on  the seasonality of your business and timings of payments to key suppliers and Vat returns etc there might be occasions when an overpayment is required. Therefore it is imperative that when choosing a factoring or invoice discounting facility that the flexibility and approachability of the finance company must be taken into consideration. Not all finance companies are the same and a proper invoice factoring company will be able to help you in times of need.

XL Business Finance has helped many business find the most appropriate and flexible finance company. As a rule the larger independents tend to be a little more flexible and as such they are more amenable to overpayments. They would normally only advance up to 100% of the outstanding debtor book unless there is additional security available to provide the necessary cover. Try and approach yoyr local bank manager to organise an overpayment. It just wont happen. With a independent provider you are never more than one or two phone calls away from a decision maker and as such they are far more flexible.

When we say independent finance company we mean one that isn’t bank owned or doesn’t borrow money from the banks to lend money. There are plenty of so called independent invoice factoring companies that borrow money off the banks and as a result tend to have the same sort of restrictions that the banks have. A rue independent is one that does not borrow any money off the banks and it is these that tend to be more flexible.

Invoice financing and trade facilities

February 8th, 2010

Invoice financing can provide  much needed working capital however when combined with an international trade finance facility the two  facilities dove tail to provide the complete funding solution. Any businesses wishing to import goods from a foreign country can do so without having to use any of their own capital provided that you have guaranteed orders in the UK. On trhe back of these orders the finance company will provide the cash to import the goods. As soon as the goods are delivered to your customers premises, you will raise an invoice. Either the customer pays immediately and the trade facility is repaid in full or you provide your customer with credit and the same finance company provides an invoice discounting or factoring facility against your invoices and the proceeds are used to pay the trade facility.

This process would seem pretty simple however not all financial institutions provide the two services together. If you went to the bank asking fro a trade facility the amount of credit you are provided with will depend on the length of time your business has been trading, how profitable it is, and the level of available security. Providing a one stop shop is difficult in that it is a very specialist market however once you know which funders are in the market you might be pleasantly surprised as to the level of funding available.

XL business Finance has been helping many businesses trading internationally with cash flow solutions. We know depending on your location . length of time in business and the level of profitability which invoice financing company will be best suited for your particular business. The good news is that you don’t necessarily have to have a stack of security available. Thankfully there are a number of independent finance companies that providing the exit route is watertight they will take a commercial view.

Invoice Finance and stocking Finance

February 7th, 2010

Invoice Finance can potentially provide so much more. As we know a factoring and invoice discounting facility will release up to 85% of a businesses unpaid invoices. In the very difficult period of obtaining cash flow from the banks it is important that a business obtains as much benefit from their invoice finance facility as possible. Obtaining stocking finance on the back of an invoice finance facility might provide your business with the additional working capital required to make the difference between success and failure. Not all stocking facilities are the same and XL Business finance has over 10 years experience in helping businesses find the right funding solutions.

At the moment there are no finance companies providing stand alone stocking facilities. Any stock finance is provided on the back of a factoring or invoice discounting facility. However beware there are only one or two funders that provide a true revolving stocking facility. Most invoice discounting companies suggest they provide  finance against stock however what they actually do is provide a further advance up to 100% of the debtor book using the stock as the additional security. In addition they claw back the overpayment over a 12 month period for example. A true revolving stocking facility will provide a percentage of the total stock in addition to the agreed prepayment against the debtor book.

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.

 
 
 

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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