The previous blog mentioned a business that required invoice financing for contractual debt. Where there is a certain amount of contractual debt the business is deemed to be more risky and therefore the finance company will require a more control over the facility. Invoice discounting is risk because the finance company has no control over the invoicing and factoring is not always preferable for many business because they would prefer a confidential facility. Confidential factoring is a half way house. A dedicated credit controller chases your customers in you name with a dedicated telephone number. Whilst it is a compromise it can be a costly funding arrangement however it does give some businesses an option which they would oif otherwise had.
Archive for March, 2011
Confidential Factoring Explained
Thursday, March 31st, 2011Factoring Contractual Debt
Wednesday, March 30th, 201199% 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.
Bank Loan or Hire Purchase
Tuesday, March 29th, 2011It is becoming increasingly common for high street banks not to offer hire purchase or finance lease facilities especially for transactions sub £50k and even sub £200k with one bank. Although your bank may offer funding for purchasing plant or machinery they are increasingly doing so by term loans. These loans are not necessarily secured against the assets being purchased but are agreed based on the trading performance of the business and security such as land already being in place. Although you may get a slightly cheaper rate than by going to an independent asset finance broker you run the possibility of tying up future lines and overexposing your business too much with one financial institution. If you can do we would recommended spreading the risk about!
Will my bank give me the best asset finance deal?
Monday, March 28th, 2011Other than a businesses own bank there are still only a few independent asset finance companies offering hire purchase and finance lease facilities. And depending upon which bank you are with you might not get offered asset finance at all. If a bank wants to deal with you then you will get some of the best deals possible. However do you really want to tie up valuable banking lines which may restrict your future ability to obtain funding. If you can get funding via a third party funder it is always advisable to spread it around a bit. You may have to jump through a few more hoops but it will certainly be worth it!
Factoring export Debt
Thursday, March 24th, 2011Factoring 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.
Asset Finance and CCJs
Wednesday, March 23rd, 2011The fact that a business has CCJs doesn’t necessarily prevent it from obtaining asset finance, however it certainly makes it more difficult. Most high street asset finance companies such as ING Lease will not touch a business with a CCJ. XL Business Finance recognises that not all CCJs are the fault of the directors.
We are therfore regularly providing hire purchase and finance lease facilities for businesses that have CCJ registered against the business. We recognise that they picked up due to disputes with suppliers or over zealous creditors. as long as there is a credible reason then it is certainly possible to help.
How to value equipment for refinancing purposes
Tuesday, March 22nd, 2011Valuations for refinancing of plant and machinery can vary vastly from customers own valuations and expectations. This is why. Refinance of assets is provided primarily by asset based lenders. Their primary concern is with the value of the kit and their exit route. They are not balance sheet lenders and whilst they will require evidence of serviceability the strength of your accounts is not their main concern.
In the event of the finance company having to take the equipment back they want to know that they can quickly sell the equipment within a relatively short time frame of usually 3 months. And what someone will pay for machinery in a forced sale situation can be a million miles apart as to what you may have to pay for the same piece of kit from a supplier. Unfortunately some directors suffer from owneritus being the condition of thinking their equipment is worth far more than it actually is
Does Your Business have the XL Factor?
Monday, March 21st, 2011Does 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!
Invoice Finance and EFG Funding
Wednesday, March 16th, 2011It is now possible to get Enterprise Finance Guarantee Funding ( EFG) on the back of invoice finance facilities. Additional funding over and above the traditional 80/85% prepayment may be available.
This news may be a welcome relief to businesses that have approached their own high street banks for EFG fundin,g but for one reason or another have been refused. It must be remembered that as far as banks are concerned the availability of a government guarantee doesn’t make a bad deal good. For a business to be available for EFG funding via a high street bank, they must meet that banks normal lending criteria and if there is a lack of security in the deal then that is where the EFG funding kicks in.
If you don’t meet the banks’ normal lending criteria then it won’t get past first base. The problem is that it appears that many commercial high street bank managers don’t know what they can and can’t do and rather than saying no, they string the customer along on a merry dance.
There are currently two invoice finance companies offering EFG funding on the back of invoice finance. One provider will provide an overpayment to a maximim of 100% of the outstanding debtor book whilst the other will provide EFG funding equivalent to any director’s loans that there might be in the business.
Obviously these companies use slightly different criteria and it doesn’t take a rocket scientist to work out which invoice finance company might be best for you.
Is it Possible to refinance plant and machinery via a prime funder?
Friday, March 11th, 2011For the right customer it may now be possible to obtain asset refinancing via a high street finance company. Asset refinance has been a very specialist market up until now. But are things about to change?
Probably not but if you have a very very strong balance sheet and you are looking to refinance for positive reasons then it just may be possible. The flood gates are certainly not going to open but it is certainly worth knowing about.
Asset refinance has always been a specialist area because there are so many pitfalls from the funders perspective compared with just taking an invoice direct from a supplier. With a traditional hire purchase or finance lease transaction it is so so more complicated and an area that the high street have traditionally shyed away from.
The biggest hurdle that a finance company must overcome is obtaining an accurate value for refinancing purposes. This must be a realistic value and should the plant or machinery come back to the finance company in a forced sale this value would need to be achieved in a realistic time frame for the benefit of all concerned.
The finance company must ensure that they get good title to the equipment by ensuring that they have the necessary debenture waivers and ensuring the business can prove that the kit isn’t already on finance. Documentation is also slightly different as there is the possibility of doing the deal on sale and hire purchase back, sale and lease back or loan and chattel mortgage. Which is the best depends on the circumstances around the asset refinance and each deal can be different
