As the economy heads out of recession many businesses will experience an increase in turnover. There are a few signs that this is already starting to happen in certain sectors of the economy. Go to the bank for an increase in bank overdraft in order to fund your working capital requirement and your request will probably fall on death ears. Thankfully invoice factoring can potential release up eighty five percent of your unpaid invoices within twenty four hours. In addition the amount and level of any factoring facility is not restricted by the strength of your balance sheet and any available security but by the amount of your outstanding invoices. The facility will grow with your business to give you the financial freedom that you require.
It was once said that eight out of ten businesses went bust not because they were not profitable but because they ran out of cash and were unable to manage their cash flow adequately. Any new start business will probably go to their bank as a first port of call and try and arrange a bank overdraft. If you have a sympathetic bank manager and if he likes you allotyou might get a £10k facility. Anything over and above that they will want personal guarantees , register a debenture over the business and will need to take a charge over your personal property providing you have enough equity.
There are many reasons as to why a business would want to change their invoice factoring company. The main reason is through a lack of flexibility when it comes to credit limits against individual customers. It may also be that the factoring company that you are using restricts the overall funding limit. It may also be that they are no good at collecting your debt. Whatever your gripe it is not unusual for a business to want to change a factoring company and hopefully this blog will provide some information as to how to do it.
Factoring Finance is the means of obtaining cash against outstanding or unpaid invoices. Most factoring and invoice discounting companies will release up to 85% of unpaid invoices. On payment of the invoice the finance company will pay you the remaining 15% minus a small service fee and any interest due. The funding is usually provided for a maximum of 90 days however in some circumstances there are one or two finance companies that will provide funding up to 120 days. The factoring company will take a fixed and floating charge over your book debt and when you raise an invoice to your customer you request that the proceeds are paid direct to the factoring company and you provide their bank details. Factoring will also provide credit control whereby the finance company will chase your invoices on your behalf.
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.
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.
Invoice factoring is still rone of the most buoyant forms of finance available in the UK today. There are still plenty of finance companies offering various forms of invoice finance. Unlike the asset financing and leasing market which seems to have dried up somewhat the choice and availability in the invoice factoring market appears to be plentiful with plenty of options and choices. A quick search on the internet search engines will reveal numerous finance companies offering invoice factoring. There are just so many to choose from. How do you know which product is best for your business and how do you know which invoice factoring company will be best suited ti delivering the right sort of service to your business. In short a good independent factoring broker will be well placed to advise you of the may products and services available. XL Business Finance provides a free factoring and invoice discounting service which ensures the most suitable finance companies are recommended to your business.
Invoice factoring provides cash against unpaid invoices. Most finance companies will pay up to 80% of unpaid invoices and give you credit of up to 90 days. Before the credit crunch it may have been possible to obtain up to 90% of your sales ledger however this is very uncommon in the the era of very cautionary finance companies. When choosing an invoice factoring company it is important to take into consideration how flexible they may or may not be.
Arranging factoring finance for a new start business should be relatively straight forward however not all factoring companies are the same so it is imperative that if you are starting a new business that you choose the correct type of finance company for your specific requirements. A well run factoring service will release up to 80% of your unpaid invoices and provide you with much needed working capital.
It has always been said that the biggest problem that any business will face is getting cash out of their customers. Most SME’S will go bust because of inefficient cash flow. Can a business really rely on its customers paying within the normal 30 day credit terms. Probably not. And is it really wise relying on a bank overdraft which will be capped depending on the level of security available. In addition a bank overdraft can be withdrawn at a moments notice and is potentially always repayable on demand! Invoice factoring will provide a evolving credit facility for up to 90 days against 80 – 90% of your unpaid invoices.
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, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.
