The biggest problem is the ability to collect cash from customers who themselves struggling for liquidity. Combined with the reduction of credit limits this can produce a double whammy in terms of having a negative affect on cash flow. Not all factoring and invoice discounting companies are the same. Far from it. XL Business Finance has helped many businesses choose the correct factoring or invoice discounting company for their particular needs. In addition we have help plenty of businesses switch to a more flexible factoring company.

Another way we can add value is to look at the monthly hire purchase and leasing payments. It might be possible to restructure these payments for a cheaper monthly outgoing. And if there is enough value in the equipment it may even be possible to release cash from the  equity from within the machinery. It must be pointed out that refinancing existing machinery is sometimes at a premium in terms of interest rate and as such we can provide honest and impartial advice as to whether this route will work or not.

Payroll funding provided a finance facility with up to two months of a businesses gross payroll. For example if the gross payroll was £100k a facility of up to £200k may have been possible. On the basis no personal guarantees were required from the directors the facility provided a viable alternative  to bank overdrafts. It also provided an alternative for busineses that were unable to use factoring or invoice discounting facilities as a means to fund its working capital requirements. Furthermore as Smartflow was providing a service they were in fact a trade creditor and as such it did not affect any of a customers banking covenants.

As with any of these specilaist funders Smartflow will have gone into the market to borrow funds and lend them to their customers at higher rates. Therefore the rates were expensive, howver as the facilities were unsecured they were certainly not excessive. It is my guess the high rates attracted the poorer covenants and it would only take one or two deals to fall over and the rest his history.

The problem now is that the demise of Smartflow potentially leaves many customers with a funding gap. XL Business Finance, as a specilaist independent broker has been busy helping customers restructure their finances. In extreme cases we have recommended that advice be taken from a corporate recovery specilaist who  can help with any VAT and PAYE arrears which may have occurred. Refinancing existing machinery is always an option but is only workable if there is value in the equipment. Alternatively funding via the Enterprise Finance Guarantee (EFG) scheme may be possible. Obviously factoring or invoice discounting is always an option. Even if you have been told you are not eligible it is always worth contacting us because there are many specilist funders capable of doing deals the high street banks dont want to fund.

XL Business Finance has access to a number of funders who can provide you with flexible funding solutions that can release cash tied up in your company and releive some of the pressure you face every day in business.

refinancing existing machinery

invoice discounting

factoring

payroll finance