Asset finance leasing - XL Business finance

Invoice Factoring for a new start business

November 27th, 2009

In the current economic climate it is still just as difficult for a new start  business to obtain any sort of funding. As a general rule of thumb in order to be eligible for funding from a high street bank or finance company you must have been trading for at least 3 years, be profitable, provide a good old business plan, provide inside leg measurements and of course they will need your wife and kids as security. Hey and what about the EFG funding. Does anyone know a business who has managed to secure any EFG  funding?  The good news invoice factoring is probably the  easiest form of finance available for any new start business. And that includes asset finance of which are bloody experts!

Invoice factoring which enables a business to raise cash against unpaid invoices will provide most new start business with the ability to trade within the most difficult period of any new start business. As a business raises an invoice a factoring facility will provide up to 90% of your cash immediately. When your customer pays your invoice to your factoring company they will repay the remaining 10%  of your invoice less any charges.  As a new start business you will only be offered factoring which will also provide a full credit control service and depending on the spread of your customers you may be able to obtain non recourse factoring which will offer credit insurance. It is even relatively easy to obtain funding if you adverse credit. The best plan of action here would be to be fully open in your dealings as it is better to get all those skeletons out in one go.

XL Business can help you choose the appropriate factoring company for your business. How we guide you to the right factoring company will depend on your location, the expected turnover and the particular sector of your business. Please will free to give us a call to discuss your own requirements.

How to choose an invoice financing company

November 26th, 2009

There are many factors which you should take into consideration when choosing an invoice financing company. probably the most important two are the geographical location of the finance company and does  that company have experience in your particular industry.

XL Business Finance advises many clients as to the best choice of finance company and we are continually amazed that the lengths some funders go to to try and win business hundreds and hundreds of miles from their head office. We believe that there is a good finance company no more than one hours drive from any location within most major cities in the UK. What is the point of choosing a finance company whose head office is based in London if you operate out of Manchester or Liverpool. Surely if you have any issues you want to jump in a car and be having a face to face chat to someone within the hour.

Secondly it is important that your particular finance company has the expertise in your particular industry or sector. You will tend to find areas of specialism in recruitment, haulage, printing, engineering, construction and export factoring and trade finance. It is worth asking for a few references.

How does confidential factoring work?

November 25th, 2009

Confidential factoring gives a business the same benefits of a full credit control service however the facility is set up in a way that your customers will be unaware that you are factoring your debts. Businesses which have been used to invoice discounting but  have been experiencing difficult trading conditions may find that their banks are pushing them towards a full factoring service.

Invoice discounting is perceived as a more risky funding product as the finance company do not phone your customers to chase your debts. They leave it down to you and therefore you must have good credit control systems in place. In difficult times it is more likely a struggling businesses will try and put through fictitious invoices. With a factoring facility there is less chance of a fraudulent transaction because the finance company has a better control and understanding of your debts.

Confidential factoring could just be the facility that gives you the best of both worlds. It basically works by the finance company giving you a dedicated credit controller who will chase debts in your business name. Your customers are also given a unique telephone number which is answered in your name. As and when monies are collected they are paid to a trust account. By doing this the finance company maintains a far greater control on your financial matters and therefore they are at less risk. You as a customer is happy because you maintain the confidentiality which maintains your reputation and status with your customers.

At the time of writing this blog we are  aware of only one finance company that provides a confidential factoring product.  Most businesses are unaware that such a product exists and again we can use our expertise and experience to make sure you get the best possible funding solution for your business.

Which invoice discounting company is best for financing contractual debt.

November 24th, 2009

Not all invoice discounting companies are the same. This is especially true if there is a certain amount of contractual debt within your invoicing procedure. Contractual debt is most relevant in the construction sector whereby invoice are produced at certain stages within a project. There are only two invoice finance companies that are capable of handling contractual debt and both are very different finance companies indeed

Most finance companies have been told that it is not possible to raise cash against contracts   ( normally by their bank) however XL Business Finance has been helping clients obtain debtor finance where contracts are involved. The problem with contractual debt if that the job isn’t finished then the end customer can with hold payment. For this reason if you mention contracts nearly every invoice discounting company in the land will not be able to provide funding.

There is one high street bank that can provide invoice discounting against contractual debt. I have told you in previous blogs that we are not totally against the high street banks as there are a few exceptions to the rule and this is certainly one of them! The other finance company is a larger independent that uses in house quantitative surveyors to check the value of the work undertaken. Which finance company is best for you depends upon your location, length of time trading and how profitable you are.  XL Business Finance is very capable of assisting you with finding the right funding partner.

Is invoice finance better than an overdraft

November 23rd, 2009

In our opinion most definitely yes!  Invoice finance will provide instantaneous cash against your unpaid invoices. The facility within reason  will grow with your business and in terms of security it is far less onerous than any bank overdraft facility.

The problem with overdrafts is that it is very difficult to get an adequate facility unless the business is very profitable or a business has a significant amount of property they can put up as security. And less face it 99% of businesses nowadays don’t fall into this category.   The other big problem with bank overdrafts is that they are repayable on demand. If you file a poor set of figures or present your bank manager with a  iffy management accounts you run the risk of having your overdraft pulled from under you. Once upon a time most people new that this was the case but had never actually heard of it happening. Unfortunately nowadays it is happening all the time. We are constantly hearing of horror stories of high street lenders being unable to renew overdraft facilities and leaving businesses in a right old pickle.

This would never happen with an invoice discounting or factoring facility. These forms of debtor finance are secured against the unpaid invoices. The facility grows with the business  and the invoice finance facility use their expertise to collect the debt on your behalf. The problem is that banks will try and persuade their customers to use their own factoring companies and in our experience these bank based lender don’t always provide the same flexibility and expertise of some of the independent companies.

XL Business Finance has over 10 years of helping and advising businesses as to which is the best funder for their specific requirements. For a totally impartial and independent view give Mark Redman a call on 07748 635 206.

I want to sell my business

November 22nd, 2009

As a leading business finance provider XL Business Finance runs a database of  individuals and organisations  wishing to acquire businesses via amalgamation and acquisition. If you feel that the recession has taken its toll and you have been considering your long term goals and exit strategy XL Businesses Finance will be able to help. Through our extensive network of  professionals and existing client database we have been successful matching business buyers and sellers together.

Although the mergers and acquisitions market has not been as buoyant as it has been there are still organisations wishing to acquire similar businesses. Some of these organisations  will to use their own cash to fund the acquisitions however others will use the assets within the business to provide the funding.

More often than not the key personnel are required to run the business on an earn out therefore providing the opportunities for the previous owners to keep involved within the business. Most acquisitions and mergers will provide some economies of scale within the market sector resulting in cost savings and increased sales opportunities. We have recently being doing work with a group of engineering companies. Previously they operated as 6 individual business and although only a small area of business overlapped they would definitely have seen each other as a threat and a competitor. They are now all working together passing non core business to each other and as a result turnover across the group is increasing. Safety in numbers.

How do I refinance existing Equipment

November 21st, 2009

More and more businesses are looking to refinance existing equipment, plant and machinery to assist we cash flow. XL Business Finance has been helping customers for 10 years and is one of the UK leading independent finance companies in this area.  Not only can refinancing equipment provide cash for any purpose  and provide financial freedom,  it is quite possible to refinance plant and machinery already on finance and provide a massive cash flow benefit by having a lower monthly payment.

The first thing we have to do is obtain a valuation for your existing machinery. Any heavy goods such as engineering equipment, printing equipment yellow, goods commercial vehicles, buses and coaches are all suitable security. We will age make  model and any details of any  extras which might positively enhance the valuation. We will then obtain valuations for various different sources.  As this doesn’t cost anything we will only have indicative valuations only. XL Business Finance has the expertise and knowledge in various sectors to know which finance companies and valuers will provide the best valuations in various sectors

If the valuation stacks up we will obtain accounting information and bank statements to obtain a funding facility. If equipment is already on finance if we can obtain copies of the finance agreements and we will be able to calculate approx settlement figures and if there is any equity in any of the equipment. It is possible to refinance the equipment by ay of a sale and lease back, sale and hire purchase back and a loan and chattel mortgage. Which facility is best for you depends upon the written down value in your accounts and your preferred finance method.

Maximise your cashflow with invoice factoring

November 20th, 2009

Once upon a time invoice factoring was condsidered the lend of last resort. There was once a stigma surrounding factoring or invoice discounting however businesses wishing to maximise their cash flow realise that there are no better options.  Any sensible finance director or managing director will know that a bank overdraft is potentially a very dangerous funding option. All overdrafts are repayable on demand and we have seen many instances recently where once very profitable businesses have had their overdrafts withdrawn because of a poor set of trading results. This can have catastrophic consequences for the business and can even have worse consequences for the directors particularly if personal assets have been lodged as security.

Factoring or invoice discounting both maximise a businesses cash flow by releasing cash against invoices you have raised but as yet have not been paid for. The security is the actual invoice and the factoring or invoice discounting company are expert in making sure that the invoices are paid in a timely and orderly fashion. Therefore any exposure as a result personal guarantees is reduced to a minimum.  Guarantees are not taken by all finance companies . It just depends on the circumstances of each particular deal.  This has got to better than using a bank overdraft!!!

Why use an Invoice financing broker

November 19th, 2009

I read on a blog recently asking what a factoring or invoice financing finance broker does for his money. It was suggested that a broker should approach the most  number of finance companies possible and get the cheapest quote for their customer. I couldn’t disagree more. Any deal that gets touted around the market and effectively becomes a beauty parade of factoring companies can do a business more harm than good. The problem is that if a finance company is aware that they are up against three or more finance companies they don’t take the deal seriously. We have seen business recently that have seen six or seven finance companies.

At XL Business Finance we will talk to our customers and very quickly we can narrow the most appropriate finance company to two or maybe three. Different invoice  finance  companies all have different ares of expertise. WE understand the factoring and invoice discounting market and we understand which finance company will be best suited for your particular requirements. Some finance companies are good in construction which has allot of contractual debt. Other finance companies are good at international trade and some are better than others at credit control.  Also  there are a number of regionalized companies that a strong presence in certain geographical areas. Why would you use  an invoice finance company based in London if your business is based in Manchester or visa versa.

So when we have narrowed it down to the two or three most appropriate finance com[pany w will set up meetings on your behalf. We than say then it comes down to personal choice and you will more often choose  the company that you feel you can develop a rapport with the members of staff. In addition this costs you nothing. Our service is totally free. We do however take a introductory commission for the finance company.  All factoring and invoice discounting companies will pay commissions so rest assured our advice will be impartial and we wont send you a bill!!!

What do I do if my bank withdraws my factoring facility

November 18th, 2009

Although the high street banks all say that their doors are open for business in reality this couldn’t be further from the truth. What is happening at the moment is that the banks are looking at their portfolios very closely in deed. If a business steps out of line in terms of how they operate their factoring facility , they post a bad set of results the high street banks are proving to be very in flexible. In truth before the recession they were probably taking on too many customers than they should hve done. As a result service levels dropped and now that the economy has taken a turn for the worse they cannot manage their accounts as they should.

The result is that Banks  are looking for excuses to clean up their portfolios. At XL Business Finance we are seeing more and more businesses that have been given notice to change to a new factoring company. Although this will be a worry for many businesses the good news is that are plenty of finance companies that are actively looking for the customers that the high street banks do not wish to keep on their books. XL Business Finance has the experience and knowledge of the UK factoring market to help you find a new finance company.

We will make sure that your new company will provide you with the service and flexibility that your business will require. Any  independent factoring company will provide a much better service than any high street bank. Depending on your own particular circumstances and geographical location we will ensure that you get talking to the most appropriate finance company.

 
 
 

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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