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Archive for September, 2011

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.

Banks still letting smaller companies down

Thursday, September 8th, 2011

Data just released from the British Bankers’ Association show that lending to private,non-financial companies reduced by £2.5 billion in June from May, the same level as seen one month earlier.

This is an even larger amount than the average £1.4 billion monthly drop seen over the previous six months; it is apparent that despite government policies and public calls to increase lending to this sector of the economy, there is still reluctance from banks to support those businesses that really need some help.

However, there are alternatives that are still available to smaller businesses; banks are not the only option. Invoice finance could be a viable solution for companies that would otherwise struggle to find the finance that they require. Without the need for additional security a bank may require, Invoice Finance can provide the necessary funding to smooth out your cash flow and provide the working capital you need to survive through these challenging times.

Is the business overdraft dead?

Wednesday, September 7th, 2011

Don’t be surprised that if over the next few months banks start to pull in business overdrafts. There is a very good reason for this and one they will probably never admit. One thing that has come out of the credit crunch is that banks are under capitalised which in turn affects their credit ratings and the cost they borrow money which ultimately affects the rates to the average punter.

When a bank lends money against an overdraft facility it must have far more cash in reserves than any other finance facility. Therefore the more exposure it has against overdrafts the less cash it needs in reserve and as such the better it’s credit rating will be. Therefore if the banks are to improve they must improve their credit rating and one way of doing this is to reduce customers business overdrafts. This has been going on already however news on the street that the banks are up for another tidying exercise.

This will ultimately leave customers in the lurch with possibly no bank based lending alternative. The good news is that there many alternatives to the high street banks. Cash flow finance such as factoring and invoice discounting are credible alternatives. Asset refinance and EFG lending and trade and stocking facilities are also options.

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.

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