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Posts Tagged ‘invoice discounting’

BAD DEBT PROTECTION

Thursday, June 27th, 2019

Bad debt protection insures your ledger in the event of a customer’s insolvency or protracted non payment. As a business you protect your assets; offices, plant and machinery, computers, or company vehicles. However, your biggest asset, your debtor book, is unprotected.

Not all finance companies provide bad debt protection in the same way therefore it is important that an insurance product is best suited to your needs

There are three main types of bad debt protection products. As to which one is the most suitable will depend on factors such as turnover and quality of your customers

Stand Alone.  

Bad Debt Protection is a way of insuring your ledger against insolvency. Traditionally this is bolted on to a factoring or invoice finance facility however a standalone facility provided by a specialist insurance provider can be cheaper and provide superior cover. Clients can also choose which debtors they want to insure, and only pay the cost of insurance as and when they fund invoices against that debtor.   Insurance can be provided for international trade as well as domestic

Non-Recourse Factoring

Non Recourse factoring provides businesses with a cash flow finance solution along with the added value of bad debt protection. Factoring provides an immediate injection of cash into the business and will provide a source of funding that will grow with your business. Bad debt protection provides peace of mind that you will get paid in the event of a customers’ insolvency / inability to pay. Factoring also can save valuable management time by chasing and collecting outstanding invoices on your behalf.

Non-Recourse Invoice Finance

Similar to other invoice discounting solutions, non-recourse invoice discounting releases cash against your invoices within 24 hours of issue, giving you access to working capital required for day-to-day activities and business expansion.

What makes non-recourse invoice discounting different from other invoice discounting solutions is that the invoice finance company additionally provides bad debt protection to safeguard your business against the risk of insolvency, and even in instances late payment of debts.

For a free without obligation quote, contact XL Business Finance today.

Invoice Finance Facility Secured for multi-million pound enginering co

Tuesday, October 23rd, 2012

XL Business Finance is delighted to have negotiated and secured a new and flexible invoice finance deal for a multi million pound  north west based engineering company. Having 3 businesses within the group, multi currency accounts and a high level of export debt this deal was not going to be be for every finance company. Whilst the business was profitable an erratic trading performance over the last few years prevented their current high street bank from funding to appropriate levels. The good news was that a specialist invoice finance company was able to provide an increased £2.0m facility, funding at a higher prepayment, full export funding and cheaper credit insurance. Of the dozens of invoice discounting and factoring companies operating out of the UK only two or three are capable of transacting such a deal and XL Business Finance was able to use its experience and expertise within the industry to help the customer find the right funding solution.

Avoid Becoming a Statistic

Wednesday, September 28th, 2011

The Bank of England’s recent Credit Conditions Survey found that default rates on loans in Q2 increased for small businesses. By acting now, an invoice finance provider can help your business to avoid becoming part of these statistics.

In addition to trying to win new business, companies are equally concerned about whether their existing customers can pay, and on what terms.  Businesses often rely on loans and overdrafts to provide the capital they need; in recent years however, a variety of invoice finance options, such as factoring have helped SMEs to ease their funding gaps.

Not only do these arrangements have more flexibility than bank loans, but they are quicker and tailored to a company’s specific requirements. In both good and challenging markets, invoice finance can provide the flexibility and access to capital that a business needs to thrive and grow. The annual cost of a factoring facility starts as low as 1% of sales so it is a very cost effective option for business owners.

Can Asset Based Lending provide an alternative to high street banks?

Monday, September 5th, 2011

A traditional Asset Based Lender  or ABL predominantly provides  cash flow finance. The main facility they offer will be invoice  invoice discounting however they can also  provide stocking finance, plant and machinery  finance/refinance and for the right customers commercial mortgages as well. Although the banks serve a purpose for many businesses the amount of facilities that are available are often dictated by the size of the balance sheet and and previous years trading performance. Therefore the level of available funding isn’t necessarily related to the amount of available security. How many times  have you heard a business owner say that the bank has plenty of available security but the bank will not increase their facilities

ABL lenders look at things in a slightly different perspective. Whilst it is important that they buy into the business and are comfortable with its trading performance they are mainly concerned with the available level of security. An invoice discounting facility will provide funding of circa 85% of the unpaid debtors. They will also consider providing additional working capital secured against plant and machinery. They will lend anything up to 80% of its value depending on the circumstances around the deal. A true revolving stocking facility may also be appropriate and potentially commercial mortgage funding is also available. In addition an ABL lender is not necessarily after the clearing banking and as such you will be able to leave your clearing with your existing high street. This potentially makes for an easy transition to potentially more flexible and supportive funding arrangements.

 

 

Small Business Finance solutions

Friday, September 2nd, 2011

small business financeWe are still living in tough times financially throughout the UK with the emphasis falling on the small business. Finance can be hard to come by for the small business owner.

Often a small business must undertake a large capital equipment investment in order to grow. The balance sheet of the business is often not strong enough to justify a Hire Purchase or Finance Lease facility.

Without capital investment the business can not grow and become more profitable. A chicken and egg scenario.

Small Business Finance is an area in which XL Business Finance has a great deal of expertise. As an independent finance broker we understand the problems of small business finance, arranging equipment leasing and machinery finance for example.

At XL Business Finance we can provide small business finance for investments from as little as £1000. This could be useful for providing tax efficient leasing for office furniture, computer equipment and telephone systems for instance.

Do not think of us as a company who provides you with a one off service to get you up and running then disappears into the night. We work along side many clients for many years providing finance solutions such as factoring, debt factoring or factoring invoice discounting facility.

As an independent factoring broker XL Business Finance can provide you with the best Business finance to meet your specific requirements.

What is a factoring broker?

Monday, June 20th, 2011

It makes sense to use a reputable and well established factoring broker. They will undoubtedly find you the best option which will be invaluable when it comes to choosing the right factoring and invoice discounting company for your business.

Unlike asset finance specialists where commission is added into the deal, the factoring broker is paid by the factoring or invoice discounting company from the income they would normally charge.

There are some important factors that need to be taken into account when choosing the right finance company. The biggest factor is to identify whether your business requires factoring or invoice discounting. Not all funders are equally specialised in factoring and invoice discounting. In fact some may just concentrate on one aspect of funding. The size and length your business has been trading needs also to be taken into consideration. High street banks are not always the most appropriate funder.

XL Business finance is one of the North of England’s premier independent finance companies with established links to many of the UK’s leading finance houses. Call us today, we are happy to discuss your specific situation.

Invoice Discounting Companies

Thursday, April 14th, 2011

Invoice discounting can provide cash against up to 85 % of unpaid invoices however there are so many invoice discounting  comapnioes to chooose from.  How do you know whidch uis the right provider for your business.

We all know there are the high street banks providing invoice discounting facilities. There are providers that are owned by lessor known banks foreign banks which tend to havce their own atonomy. And then there are the independents that are not owned by the banks but  are privately owned. Which funder is best for you depends upon your own particulkar circumstances and  a good invoice discounting broker will certainly be able to add value in the process.

Replacing an overdraft with invoice finance

Saturday, April 2nd, 2011

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.

How to compare Invoice Discounting quotes

Thursday, March 3rd, 2011

Comparing invoice discounting quotes for the first time can be quite complicated. There are so many different aspects of a deal, from interest rates, refactoring charges and  service fees. The cheapest is not always best because credit limits for individual clients and prepayment percentages must also be taken into consideration.  There is no point going with the cheapest deal if you are only going to get 50% of your expected funding. XL Business Finance has been helping businesses for over 10 years compare quotes and help the customer get into the nitty gritty of things.

There are two main charges to an invoice discounting facility. The interest rate for the money borrowed and the service fee. The interest rate is usually a percentage over base rate and is comparable to a bank overdraft rate. Some finance companies charge a min base rate and some link to LIBOR. Bank base rate is not always the same so it is always worth taking into consideration.

The service fee is a percentage of annual turnover however beware some invoice discounting companies charge a refactoring charge. This can be as much as 1% of any invoices that go over 90 days. Whilst this will not be a problem if your debt turn is good it is worth noting because if your customers take longer to pay it will increase the cost of the facility.

An invoice discounting will also charge a take on fee which can be anything from a few hundred quid to a percentage of the arranged facility.

£4.0m invoice discounting facility for export business

Tuesday, February 22nd, 2011

As an credible independent invoice finance broker we were recently approached by a business having trouble obtaining funding from their high street bank. The business mainly exported goods to Europe and Africa had access to a £3.0m invoice discounting facility. As most of the African debt could be credit insured it had always been possible to obtain funding against these outstanding invoices. That was until the bank had a change of policy.

At a review meting the bank announced that they would no longer be able to finance the African invoices. A change of policy apparently. The customer during 15 years of trading had never had a bad debt into Africa and in any case most of the debtors could be credit insured. This obviously had a dramatic affect on the businesses cash flow and as such the £250k in case of need overdraft facility quickly reached its limit.

In our opinion a switch from one high street bank to another would certainly be out of the frying pan and into the fire. We therefore introduced our customer to a couple of lessor known invoice discounting ccompanies that specialise in bigger deals. They kind of start off where the high street banks start getting uncomfortable. They tend to be owned by foreign banks however unlike invoice discounting companies attached to high street banks they have their own autonomy. In addition because they are foreign owned they tend to be able to deal with world wide markets.

It is always worth getting an alternative to a high street bank and a good independent finance broker will undoubtedly be able to point you in the right direction

 
 
 

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 Limited are authorised and regulated by the Financial Conduct Authority FRN 718737).

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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