It is commonly thought that bad debt protection or credit insurance can only be provided by the the incumbent invoice discounting or factoring company. It is a little known fact that credit insurance can be provided by an independent third party.

Often the bolt on products provided by banks and high street factoring and invoice discounting companies can be expensive and provide inferior cover. An independent can often provided greater levels of cover for the same customers , at a lower cost and with more protection. As far as we are aware there is only one or two high street finance companies that provide bad debt protection in the event of a protracted claim. Most high street funders only pay out in the event of insolvency which is in contrast to most independent insurance companies that as a matter of course provide cover in the event of a protracted dispute. Worth comparing then

In theory obtaining a factoring facility for a new start business should be a relatively easy process. However we would advise that you consider a specialist factoring company that isn’t necessarily attached to a high street bank. Most finance companies will offer a facility providing that your debtors are of a decent nature. If you are starting off we only one or two customers then it is important that you obtain credit insurance. If your one and only customer were to go bust this would have disastrous consequences for your business and will potentially leave you personally exposed as you will have been asked to provide personal guarantees.

The most common recourse period offered by a factoring company is 90 days. If at the end of 90 days and your customer hasn’t paid their invoice many factoring companies charge a refactoring charge which can be anything from 0 .25% to 2% of the outstanding invoice. Ouch!  Most factoring companies will not even mention this but leave it the small print. Call me cynical but there seems to be an incentive not to collect your invoices in time. If you are switching to factoring make sure that you choose business which as a good reputation and has the ability to collect payments quickly and efficiently. A tip small independents tend to be better at this than high street banks.

We are still seeing so many businesses struggling for cash flow with inadequate working capital facilities and replacing their bank overdrafts with invoice finance. Bank overdrafts are not designed to grow as a business expands and believe it or not there are many businesses out there that seemed to have turned the corner. This seems very much to be the case in the manufacturing and engineering sector which seems to be very very buoyant at the moment. Invoice finance by either factoring or invoice discounting can release cash against 85% of a businesses unpaid invoices. In many instances this can create cash far in excess of any bank overdraft facility is capable of doing.

99% of UK based independent and bank based factoring companies will run a mile when they see that a business supplier terms and conditions are deemed to be slightly contractual. Unless you operate on a sale and forget basis it is worth  ironing out these issues from the start. If a supplier agreement is place that could be construed as contractual it is always worth getting your supplier terms checked out. XL Business Finance recently helped a very profitable business replace a bank overdraft with an invoice discounting facility. Although the business was actually getting 4 quotes only one finance company was able to fund contractual debt allot of time would have been saved at the start of the process if this had been know.

Factoring export debt has always been difficult for many finance companies. The good news is that there are one or two finance companies that can provide specialist expertise in this area. If you are exporting to Europe than there are several specialist companies that can assist. If you are exporting to the rest of the world then things are slightly more complicated. However providing you can obtain credit insurance in that particular country there are factoring companies that will provide funding just about to anywhere in the world. XL Business Finance has been helping many such companies choose the right funding partner in exactly these circumstances.

Does your business have the XL Factor.  XL Business Finance has been helping Managing Directors and Finance Directors put the X Factor back into their business. Whether it is factoring , invoice discounting , asset finance or refinance we are fast becoming one of the UKs leading and most respected independent finance companies.

In a time when it is very difficult to obtain funding via more tradition banking facilities we go the extra mile to help you find the right funding solution. Whether you are a blue chip company requiring the best interest market or a or a company requiring funding out of an administration we provide by far and away so many options than a high street bank. Give us a call today to see how we can the XL Factor into your business!

Are you using an expensive factoring facility but feel that you are doing all the work yourself?  This is the most common complaint regarding factoring finance. The factoring company is supposed to handle all the collections  and credit control. However if you choose the wrong factoring company you end up having to do all the hard work which makes the facility doubly expensive. The good news is a CHOCS facility ” Customer Handles Own Collections”   provides a half way house. Read on peops.

A CHOCS facility provides an alternative to a business that isnt eligible for  invoice discounting however would not rather go to the expense of paying for credit control with a full factoring facility. CHOCS funding is very appropriate for business that already have their own in house credit control. As with factoring your customers will be ware that you are assigning your invoices to the finance company however you will be given sole responsibility for the collections element.

Obtaining confidential invoice discounting is not as easy as it used to be this factoring facility may be the perfect solution. High street banks will often try and switch a business from confidential invoice discounting to full factoring during and following a period of difficult trading. This is because a business in such circumstances is perceived a higher risk and as such full factoring gives the banks  greater control and also a greater return for the increased risk.

A CHOCS facility can be provided by a number of independent factoring companies and as such can provide an improved service and affordability.

We automatically assume that the high street banks are the best places to obtain funding via the Enterprise Finance Guarantee Scheme. In fact 90% of EFG funding is supplied by two such banks. If for some reason your business doesn’t meet all of the banks criteria than it maybe possible to obtain EFG funding piggy backed on the back of a factoring facility.

EFG isn’t a right. Your business must meet all the banks normal lending criteria. If you tick all the boxes but there is a lack of security in a deal then that is when the EFG funding kicks into place. If you don’t meet the banks lending criteria then you wont get passed first base. Factoring and invoice discounting companies have very different lending criteria and just because you have been knocked back via the banks doesn’t mean you will do so by a factoring or invoice discounting company.

There are two main factoring companies offering EFG funding and they do things slightly different. One funder will use EFG to lend up to 100% of your debtor book. For a business with high levels of turnover this could amount to significant levels of dosh.

Another funder will advance an amount equivalent to any directors loans in the business up to a maximum of no more than 50% of the debtors advance.

Both companies as always have a slightly different perspective on things and so if you have directors loans in the business it may be worth a have discussions with both to see which one will provide the best funding solution.

New start asset finance and factoring facility agreed for new start direct mail business

Very brave I hear you all shout.  A new start business in the current economic climate. Well with the right type of funding support greatly increases the chance of survival. It is a well known myth that businesses don’t go bust because they don’t make money but because they run out of money. How many times have we seen many businesses purchase equipment for cash and then at a later date try and refinance the kit because they have run out of money. We say time and time again that it is far easier organising the finance on the outset rather than trying to do it retrospectively.

Under the right circumstances it is always possible to organise hire purchase and leasing for a new start business. Allot obviously depends on the type of equipment and the security that it offers. Traditional assets with good residual values always provides better security than high tech equipment and are easier to finance. In addition the people behind the business are just as important and your personal circumstances will be taken into consideration.

Once you are  up and running it is important that your business has adequate cash flow. Overdrafts are hard to come by for new start businesses. A factoring facility providing cash against unpaid invoices will provide a valuable working capital and a life line. In choosing your factoring company beware not all factoring companies are the same and some are better at handling new start businesses than others. Much will depend on the nature of your business , the quality of the debtor book and your geographic location.