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Posts Tagged ‘invoice finance’

Asset Finance leasing for a new start business

Sunday, December 13th, 2009

Arranging any kind of asset finance for a new start business can be a daunting task. It can even more difficult in the current economic climate.  With very few leasing companies lending money and the ones that are left lending money can be most difficult to deal with. They are only lending money on their terms and don’t expect to be paying any cheap interest rates. The good news is that arranging hire purchase and finance lease facilities can be relatively straight forward in terms of information require by the leasing companies. We will not require elaborate business plans and cash flow projections

 At XL Business Finance we have many years of arranging asset finance for our clients. Many suppliers and introducers come back to us because of our ability to arrange funding at the most competitive rates for long established and profitable companies. In addition they know that as an independent finance company we can quickly determine whether a potential new start business will be eligible for finance.

Without doubt we will be able to let you know in a five minute conversation as to whether you will be eligible or not. First with out a doubt you must be a home owner. The finance company don’t necessarily require a charge over your property. It is just that if you screw up you are more likely to do a runner if you are a tenant. If you are setting up a limited company then it is a non starter if you don’t want to provide a personal guarantee.  If you are a home owner with plenty of equity in your personal property you are a far better risk. Also if you have any adverse personal credit information then it also becomes more difficult. It is imperative that if you are thinking of starting a new business don’t take your eye of your personal finances.

If you are also looking to take advantage of invoice finance such as factoring or invoice discounting this approach will also help you in your entrepreneurial adventure.

Invoice discounting credit limits

Thursday, December 10th, 2009

In theory  invoice discounting finance will release up to 80-90% of your total invoice book. All finance companies have  eye grabbing headline rates and promise the earth when it comes to  releasing cash. However the biggest problem with invoice finance and factoring is that it is very difficult to obtain funding against a client if they have a very poor credit rating.  As most  finance companies will tie you into a 12 month contract or even longer it is imperative that when choosing a finance partner  that potential credit limits are taken into consideration. XL Business Finance has over 10 years experience in helping and advising clients choosing the the correct invoice finance company.

Different finance companies have differing policies when it comes to credit limits for invoice discounting and factoring.  For example certain banks will not fund a debtor at more than 20% of your total turnover. Other financial institutions may be happy to fund a debtor no matter what the percentage of turnover. Recently we have seen one high street bank provide a £10k limit against all a businesses turnover. Not brilliant if your business is dealing with a few large businesses. However this could very useful if your businesses have many different customers and the outstanding balance is below £10,000.

What we recommend is that if you have been unhappy with your existing finance company as an independent finance company we can analyse your aged debtor report and work out what funding limits you may obtain with a variety of different finance companies. You could do this your self however you might find you are talking to the wrong companies. We can save you the time and the hassle and more importantly it wont cost you a penny. Give us a call today and find out how one of the UK’s leading independent business finance and invoice finance companies can help your business.

Invoice Finance in a recession

Wednesday, December 9th, 2009

The ability to raise cash against unpaid invoices is probably a more a necssity than a luxury in the current econimic climate. There are so many invoice finance  providers to choose from and it is imperative that you choose the right funding partner for your business. It is no point going with a finance company that provides a headline rate of 90% against unpaid invoices if they are very restrictive on individual credit limits and you only end up with 60% funding. XL Buusiness Finance has over 10 years experience in the factoring and invoice discounting market and can help your business find the most appropriate funding partner.

Any search on google will reveal millions of results for invoice finance. There will be banks , independent finance companies and brokers all vying for your business. An independent finance company is  an actual lender that is not bank owned,  whereas a broker is not a lender and will take a commission from the finance company for introducing you to the most appropriate funder.  During a recession it is important that you choose the right funding partner. An independent finance company will tend to be more flexible than a high street bank.  There are many independent factoring and invoice discounting companies and which one is most suitable for your business will depend on your geographic location, how long you have been trading, the quality and number of your invoices and whether you are profitable or not. If any part of your debtor book is contractual than there are only one or two finance companies which can potentially provide funding for your business.

As a rule of thumb if you need a factoring facility with full credit control we would not normally recommended a bank. The independents tend to be better at credit control and are normally better at collecting the debt. If your business is very profitable and squeaky clean then invoice discounting via the banks might be more beneficial. However for every high street bank we would be able to recommend another invoice discounting company that is bank owned but has their own autonomy.

Factoring with VAT and PAYE arrears

Tuesday, December 8th, 2009

As one of the UK ‘s leading independent finance brokers we have recently been asked to look at a number of factoring deals whereby  the customer has had some serious financial difficulties leading to VAT and PAYE arrears. At least one of these businesses was with another factoring company and at least one had no form of cash flow finance apart from a small bank overdraft. XL Businesses finance in both cases was able to find a flexible and sympathetic finance company.

With factoring it is possible to immediately release up to 90% of unpaid invoices. However there are so many finance companies offering these facilities. If your business has been struggling for whatever reason it is always best to get these issues out in the open. The worst thing you can do is is not disclose the full extent of many problems because most finance companies will discover any problems for themselves. This will rightly put the finance company on the back foot as they will view you and your business with an air suspicion.

VAT and Vat arrears is becoming more and more common place and whilst this is not ideal this doesn’t automatically exclude you from debtor finance. You might as well forget about finance with a high street bank and if you are already factoring or invoice discounting with a bank based factoring company you will probably find you have an unsympathetic approach from your bank.  This may result in reduced credit limits on individual customers and the   overall funding limit being reduced which obviously increases the problem further.

A more flexible approach from an independent factoring company can often result in more cash.  In addition there   are other financing options which can often help with cash flow. If your business operates heavy plant and machinery and industrial equipment a new invoice finance provider combined with refinancing of existing plant and machinery can provide much needed cash flow.

Single Debtor Invoice Finance

Monday, November 30th, 2009

It is now possible to obtain one off factoring against a single debtor. One finance company has entered the market whereby once you are set up with the finance company you can pick and choose which invoices you  factor.

Needless to say this facility will not work if the debtor is of a poor quality and has  a bad credit rating. Single debtor invoice finance can sit alongside other banking facilities however it wont work if  you are already factoring or invoice discounting.  A single invoice can be discounted at any point up to 90 days of it being issued. The minimum size invoice that can be discounted is £5,000 and there is  an initial  minimum charge of 5% for the first 21 days that the money  remains unpaid. Depending  on the remaining number of days the invoice remains unpaid a small amount accrues on a daily basis over and bove the initial 21 days.

This facility can be used for a one off invoice however it can also be used as as little or as often as you require. There is no on going fee just the standard charges and and when you decide to factor your invoices. The advantages of this kind of funding are obvious particularly for those businesses not wishing to be tied up for a full factoring facility. In addition if  a business finds its self using the funding more and more often then it is possible to switch to a full factoring or invoice discounting facility.

Which invoice discounting company is best for financing contractual debt.

Tuesday, 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

Monday, 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.

How to choose an invoice finance company

Monday, November 16th, 2009

A question that at XL Business Finance we are asked most frequently. Imagine the financial freedom that an invoice finance  facility will provide. Up to 90% of unpaid invoices are released by way of a cash injection into your business as and when you raise your invoices. This is a great facility which grows with your business and there are many UK based finance companies offering to help. One search on google will reveal hundreds of factoring companies.  Some are bank owned, others are independent and most are still being aggressive in terms of doing deals. How do you know which finance company is best for your particular needs. At XL Business Finance we have 15 years experience of helping and advising our clients.

Invoice Finance is basically a generic term for the many different finance options available. Factoring , invoice discounting, confidential factoring and confidential invoice discounting are all basically forms of debtor finance.   Which finance company is best for you depends on which facility you require. New start businesses, businesses with a poor set of trading results or with a relatively small turnover will only be offered a  disclosed factoring facility whereby your customers will be aware that a finance company is financing your invoices.  XL Business finance would normally recommended one of the larger independents for a factoring facilty because normally they provide a better service than a bank based factoring company. However if your business is long established and profitable and the finance company will allow you to do your credit control then in certain circumstances a bank based invoice discounting company may be more appropriate. However beware if your business trading performance takes a urn for the worst then you will be wishing you have gone with a independent who tend to be more approachable and flexible.

Improve cashflow with Invoice Finance

Wednesday, November 11th, 2009

Invoice Finance is suitable for businesses that supply goods and service to other businesses and provide them with  with credit terms for payment. This form of cash flow finance will provide a business with up to 95% of their unpaid invoices immediately with the remainder payable to the business when your customer settles the invoice. Once upon a time Invoice Finance was deemed to be a finance product of last resort however it is fast becoming the number one choice finance product for managing a businesses cash flow.

There are various forms of funding  available however most  are a variation of the sane product. Invoice discounting , invoice finance and invoice factoring are  all basically the same products providing cash against unpaid invoices. Banks have traditionally offered  overdrafts as a working capital facility however they do not have the same flexibility and adaptability. Invoice Finance will grow with your business as the factoring companies have a close control and therefore a better understanding of the invoices you are raising. The facility grows as you grow your business.  An overdraft is traditionally agreed on the performance of the business and is often restricted by additional available security such as bricks and mortar. At some point most banks will try and force a business down the factoring or invoice discounting route however there are many independent alternatives possibly provide more funding and a much better service.

Invoice Discounting

Thursday, November 5th, 2009

Invoice discounting is a form of invoice finance providing the financial freedom to grow your business. This form of discounting is usually provided on a confidential basis meaning your customers are unaware that you are using a invoice discounting  company. As such the invoice discounting provides a flexible form of finance enabling a business to release 90% of their unpaid invoices. Recently XL Business Finance has been advising a number of business with turnover in excess of 20m that have been disillusioned with inflexible high street  banking institutions. The good news is that there are a number of specialist lesser known banks specialising in businesses with larger turnover. There are not many institutions capable of handling such large corporate businesses but we have the expertise to matchyou with the most suitable funder.

XL Business Finance regularly introduce invoice discounting to two or three finance companies some of which are foreign owned. These  funders  have been established with the sole purpose of specialising in the UK invoice discounting market. I guarantee you probably haven’t heard of these finance companies however their personnel are of he highest quality and have the ability to structure the most complex of deals. All of our customers have been highly impressed with our recommendations.

 
 
 

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.

 

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