At a time when many of the high street banks and finance companies are still difficult to deal with it is imperative than any application for hire purchase or leasing facilities to the few remaining finance companies are presented in the best possible format. At XL Business finance we have over ten years of experience and expertese in organising competitive finance facilities for a variety of businesses. The following will give you an idea of the type of information that we will collate and present to the finance company.

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Last week XL Business finance was approached by a London based printing company that  needed  finance for a second hand print ppress costing approximately £80,000. Although the business was profitable and there was a strong rational for the purchase the deal did not tick all the right boxes for a high street finance company. A well known print finance company was fully exposed at around £250k and were unable to advance an further funding. We received the enquiry via our website and very quickly we were able to secure a hire purchase facility with a privately owned leasing company. This is a prime example as to how a asset finance broker can add value when it comes to organising hire purchase and finance lease facilities.

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The ability to obtain cash against your unpaid invoice can have a massive affect on your businesses cash flow and hence your ability to trade. Invoice financing is the generic term for factoring and invoice discounting both of which will release up to 80% of your unpaid invoices. The remaining 20% is paid when your customer pays you less any charges due to the invoice discounting company. As cash becomes more and more tight we understand that credit terms are being stretched further and further. Invoice financing is the perfect solution to ease your Cashflow and unlike a bank overdraft the facility is not repayable on demand and will grow with your business.

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To ensure that you get the best possible deal when financing your capital equipment you should use a well established and reputable asset finance broker that has been around the block a few times and knows and understands the leasing and hire purchase market. Beware of the retired  or recently made redundant bank manager as they have absolutely no idea what is available or achievable in the asset finance market. As one of the countries leading asset finance introduces we know exactly which finance companies finance what sort of assets for what sort of businesses.

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It appears that a bank overdraft as a means to financing a businesses cash flow requirements is becoming second place behind invoice financing. For starters it appears to be more and more difficult to obtain an overdraft. For many businesses it may be that they can obtain a token amount of £10-£20k and this may depend on the length of time a business has been  trading and whether it is profitable or not.

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We had a request yesterday from a web development company wanting some form of  invoice finance. They had aboiut fifty customers on twelve month contracts all of which paid a ten percent deposit on the work to be done and then on a monthly basis thereafter. They were invoicing at the beginning of each month for the work to be carried out for the following month. Invoice financing only works for work that has already been carried out and that is being invoiced with credit terms of thirty, sixty or ninety days. Although we were not able to help we put this enquirer in touch with a company that can offer contract finance , a totally different product.

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Any business wishing to purchase plant and machinery will know that the banks at the moment are not the most accommodating when it comes to asset finance. During the credit crunch any independence the bank owned leasing companies had will have been pulled back in under the umbrella of the main bank. What this means is that  now there very little difference in applying for a commercial bank loan or a hire purchase or leasing facility. Indeed you will find that your application for either will probably go to the same underwriter for approval. Never has it been truer that the banks will take into consideration you overall exposure when approving any type of borrow including any outstanding finance lease facilities.

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And the winner is! It depends!

Both an invoice discounting and factoring facility will release up to 85% of your unpaid invoices on a revolving credit basis. In theory both facilities will grow as your turnover increases providing you with valuable cash and working capital. In our opinion both are far better than a bank overdraft which is not as flexible and will be capped depending on how profitable or the level of security available.

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There are so many options available when it comes to factoring finance. How do you know that you are getting the best possible deal. A good factoring broker will be able to recommend the best possible finance companies for your particular circumstances.

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It appears according to a number of factoring and invoice discounting companies  that bad debt protection is one of the fastest growing finance products. Bad debt protection is added onto a factoring or invoice discounting facility and provides an insurance policy against any of your debtors going bust. It is otherwise known as non recourse factoring or invoice discounting.

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