Asset finance leasing - XL Business finance

Benefits of using an asset finance broker

April 19th, 2010

Any business wishing to purchase plant and machinery will know that the banks at the moment are not the most accommodating when it comes to asset finance. During the credit crunch any independence the bank owned leasing companies had will have been pulled back in under the umbrella of the main bank. What this means is that  now there very little difference in applying for a commercial bank loan or a hire purchase or leasing facility. Indeed you will find that your application for either will probably go to the same underwriter for approval. Never has it been truer that the banks will take into consideration you overall exposure when approving any type of borrow including any outstanding finance lease facilities.

Although credit is hard to come by never has the benefits of an asset finance broker been more important. There are still one or two independent leasing companies in the market that can compete with the big banks. So long as there is not a massive difference in the cost of borrowing why use potential valuable credit lines for purchasing assets and equipment. In deed certain banks will not provide finance lease or hire purchase facilities under £100k preferring to provide loan facilities. Whilst you may think this is the easy option commercial loans do not have the same tax advantages of leasing. For the sake of taking a little effort now it will possibly give you massive benefits in the future.

XL Buisness Finnace is one on the countries lading asset finance brokers and with over 15 years experiance we know all the UKS fiannce companies. All have different sweet spotys and all do things inslightly differing ways . We have the experience and experetese to ensure the best possible funding solutions are sourced for your particulr business.

invoice discounting vs factoring

April 18th, 2010

And the winner is! It depends!

Both an invoice discounting and factoring facility will release up to 85% of your unpaid invoices on a revolving credit basis. In theory both facilities will grow as your turnover increases providing you with valuable cash and working capital. In our opinion both are far better than a bank overdraft which is not as flexible and will be capped depending on how profitable or the level of security available.

Both factoring and invoice discounting charge an interest rate for the amount of money that you borrow which is comparable to a bank overdraft. If you don’t use the facility than there will be no interest payment. The rate of interest may vary from between one and a half percent over base to as much as three percent over bank base rate. Some finance companies charge their interest rate to Libor which at the moment doesn’t make much difference because both are about the same. Beware some finance companies charge a minimum base rate so you need to double check the small print.

The main difference is that factoring provides credit control whereas invoice discounting is provided in a confidential manner and provides a cash flow facility only. As such the service fee with a factoring company  is usually higher than with invoice discounting. With factoring they will call your customers and ensure that payments are received within the ninety days permitted. Although the costs of factoring his higher for smaller businesses compared with the cost of outsourcing credit control it can be a very cost effective form of finance.

However if you are a new start business, have a small net worth or are having trading difficulties you are unlikely to be offered invoice discounting. This is because invoice discounting can be  susceptible to fraud. As invoice discounting does not enable the provider to do any checks there have and will be cases of fresh air invoicing.

Factoring Finder

April 17th, 2010

There are so many options available when it comes to factoring finance. How do you know that you are getting the best possible deal. A good factoring broker will be able to recommend the best possible finance companies for your particular circumstances.

It makes sense to see two or three providers but if you get any more in then non of the finance companies will take you seriously. You may also find that your accountant will recommend a factoring company. We think this might be quite dangerous because most accountants will only have had experience of one or two finance companies. In our opinion most auditors are like GPs. They will have a general knowledge of most financial products and services but will not be able to pinpoint the best possible funders. Going to your accountant for factoring advice could be like going to your butcher for open heart surgery!

So why can a factoring broker provide the best possible advise. A good factoring broker will know all the different finance companies and more importantly they will know their different sweet spots. Not all finance companies can beall things to all men although the banks will try and tell you they are. Take factoring for example. Certain high street banks will only chase your  top three debtors by telephone. The rest they do by post if they can be bothered at all. Other banks have their credit department , service department and collections department in different parts of the country. How can you get the best possible service? This is just one consideration that must be taken into account but I think it gets the point across quite nicely.

Bad Protection Grows

April 16th, 2010

It appears according to a number of factoring and invoice discounting companies  that bad debt protection is one of the fastest growing finance products. Bad debt protection is added onto a factoring or invoice discounting facility and provides an insurance policy against any of your debtors going bust. It is otherwise known as non recourse factoring or invoice discounting.

These figures support and emerging trend for better organised businesses to protect themselves against the recession. Businesses have been driven to asset based lenders early in the recession for their accessibility an reliability as the banks become more difficult to deal with and pulled down the shutters. Even as we speak the importance of asset based lenders is taking on a greater importance as factoring and invoice discounting facilities are able to link their facilities to sales performance. This market is uniquely equipped to protect against over trading by ensuring that appropriate levels of funding are provided against a businesses sale ledger.

Experience suggests (and it was someone older than me that told me) that insolvency increases as we come out of a recession, so it makes to sense to protect your business with bad debt protection. As with any finance company, different factoring and invoice discounting providers provide different levels of bad debt protection. The banks tend to use their own in house insurance companies whereas the independents obtain their bad debt protection from independent insurance companies.  Which one is better for you depends on the spread and quality of your debtor book.  As one of the countries leading invoice discounting and factoring broker, we can help you obtain the best level of bad debt protection.

Invoice Finance Companies

April 15th, 2010

A quick search of the internet will reveal thousand of results for any invoice finance or factoring product. To work out which finance companies you should be contacting it may worth explaining the difference between the different results that you will find on the internet.

First of all there are bank operated invoice finance companies probably high street names that we all recognise. Secondly there are the independent lenders that do exactly the same as bank owned factoring companies however they are non bank owned and get their funds from other sources. Thirdly there are independent finance brokers like XL Business Finance that are not lenders but provide advise as to which will be the best invoice finance company for a particular business.

In our opinion we believe you will get the best advise from an independent factoring broker. They make their living making sure that they introduce the most appropriate funder to the customer. A number of sensible questions concerning the turnover, profitability , length of time trading quality and quantity of the debtor book will determine the most appropriate two or three funders. Not all finance companies are good at funding the same businesses. They all have their sweet spot and with over ten years experience in advising clients XL Business fiannce can find the most appropriate funder for your particular needs and requirements.

A good example we have dealt with recently was a business trading with a turnover in excess of £100m. The business was funded by a well known high street bank but the amount of the facility required was above the level this bank was comfortable with. The client had a number of meetings with other high street banks that again could not get comfortable with the required facility. We were able to recommend a couple of lessor known finance companies with the expertise and financial clout to take on such a business.  To date the customer is absolutely delighted.

Turn your invoces into cash with debt factoring

April 14th, 2010

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.

In addition debt factoring will provide you with a credit control service to ensure that your invoices are paid within the usual ninety day credit terms. The cost of providing such a service starts from as little as a few hundred pounds per month. And as your business grows the cost of such a service is potentially a fraction of the cost of employing a full time or even a part time credit controller. as well at the cost of the credit control an interest charge at a rate of base or libor is charged at a rate comparable to bank overdraft facility.

It must remembered that the provision of a full factoring facility is a value added service product and as such not all factoring companies are the same. The most important part of the service is ensuring your outstanding invoices are collected in a timely and professional manner. Not all finance providers provide the same level of service and as such it is important that the right finance company is chosen for your particular requirements. This is where XL Business Finance can te in and help your provide the most appropriate funding partner.

Benefits of using a commercial finance broker

April 13th, 2010

With Easter over for another year, now is an appropriate time to discuss not having all your eggs in one basket for next year?

Almost every day we see lenders creating serious issues with companies who have their main trading account, invoice discounting , asset finance lines and property loan with one funder. Whilst there can be rare occasions when this is of benefit to you it is better for you to split your banking. 

One of the main reasons for having just one funder is that the owners/directors of business don’t want to have more than one relationship as they don’t have the time to manage multiple lender relationships. This is a valid point but the pitfalls can outweigh the advantages. Two examples seen recently: 

1 Wife of director had finance refused on a new car she was purchasing. Husbands business showed a loss through management information which was a condition of the bank’s overdraft facility. 

The Bank had advised all of its subsidiary companies of the loss, even though the next month it was back in profit. 

2 Client wanted to move his invoice finance line to another provider to provide more funds. Bank refused to allow this as they also had a property loan to the business and wanted to retain the invoice facility as additional security 

It’s becoming more common for companies to interact with their funders through a third party or commercial finance broker. Whilst your accountant could do the role owners/directors are turning to experienced finance professionals who understand how banks work. 

By anticipating any issues and working with all parties this improves the relationship with the funders and saves the owner/director considerable time which is better spent on running their business. This could be for a specific project or on a retainer basis.

Factoring Explained

April 12th, 2010

Factoring is fast becoming the most popular  working capiatl facility proving a life line to many busineses. Factoring is the process of obtaining cash against your inpaid invoices typically up to 85% of the total amount. A specialist factoring company wil use  the unpaid invoice as their security and if anything happens to your business the finance company will collect the unpaid invoices to repay the debt. Factoring or even invoice discounting is great for a business that has a turonover of over £100k and if yur businesss is growing fast it will provide to working capital to fund purchaases of new stock and pay those all importnat bills.

Costs vary depending upon the size of your debtor book, the number of invoices you raise on a monthly basis nd the work involved in colecting your invoices. Rememeber factoring is a value aded service in that the factoring company also provide you with crerdit control to collect and chase your invoices leaving you free to get on with running your business.

There are two parts to the costing for a factoring service.  Firstly there is the cost of the money borrowed. This is comparable to a bank overdraft facility and is you charged at 1.5-3% over bank base rate or LIBOR depending on the finance company involved. Beware certain finance companies have a minimum base rate which could make thir headline rate be more expensive han it actually apears at first glance.

The second part to the charge is a service fee which is the charge in relation to the credit control part of the service. Depending on turnover, the number and the quality of your debtor book a small business with a turnover of over  approx £100,000 may expect to pay a few hundred poundds per month. Obviously this increases a st eturonover of the business also increses. Remember that the service fee compared to the cost of employing a full time crdit controller is very competeitive.

lnternational Trade Finance

April 11th, 2010

Most businesses will go to their banks to organise international trade finance facilities  which is great if you are a profitable business, have a very strong balance sheet and also have  plenty of security to offer. One high street bank is very strong at international trade finance. No prises for guessing but feel free to give us a call if you are stuck. So what happens if you are not strong enough to organise funding via the high street to help you purchase of buy imported goods. Thankfully there are one or two options available to help the less profitable and established businesses.

Firstly there a one or two specialist factoring and invoice discounting companies that provided you have a buyer for your imported goods will provide a trade facility for you to import. They lend you the cash against the goods and as soon as they hit the UK and are delivered to your end user either the customer pays for the cash immediately or the trade facility is repaid from a factoring or invoice discounting facility that will repay the trade facility. Simple provided the margin is good and the goods are non perishable this kind of trade finance shouldn’t be an issue

Secondly there are one or two independent financiers that under the right circumstances will provide letters of credit without the onerous security that the banks require. The facility works in exactly the same way as above that the trade facility of letter of credit is repaid from the sale of the goods to your end user or customer. Again this can be by cash on delivery or provision of factoring or invoice discounting facility on the raising of the invoice.

XL Business finance has over 10 years experience in helping business with innovative finance solutions which might not necessarily be available fro the high street banks and finance companies.

Invoice Discounting in the recovery

April 9th, 2010

As we have probably mentioned more businesses go bust coming out of a recession than actually in it ( so I have been told). This kind of makes sense. The banks are still being tight with the cash and as the recovery takes place you need more working capital. Therefore it is imperative that you get the right kind of working capital facilities in place to meet cash flow needs. 

Get too far into the banks with an overdraft and you might find  yourself in difficulty in switching to a more flexible working capital facility such as invoice discounting. Therefore if you think at any point in the future you may need some help with additional working capital you should seriously look at an invoice finance facility sooner rather than later. Invoice discounting or even factoring will release up to 85% of your unpaid invoices and will grow as your business expands. So long as your business has a good mix of customers you should be able to get funding to the maximum amount available.

Which invoice discounting company is best for your needs depends on the length of time your business has been trading, the level of profitability and the systems and procedures you have in place to monitor and chase your customers. It might be that a bank based invoice discounting company will provide you with the best deal in terms of costing but as we know the banks are not always the most flexible. XL Business Finance has over 10 years experience in helping businesses choose the right funding partner and we guarantee that we will add value to the proceedings.


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.

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