Asset finance leasing - XL Business finance

Why a business should use invoice financing

November 14th, 2009

Invoice Financing can take place in many forms and variations however in a nut shell it gives a business the ability to release cash against unpaid invoice. Historically it was used as a lend of  last resort, however over the last few years the market has matured and the stigma of using a cash flow facility seems just about to have disappeared. In fact we can give you many reasons as to why invoice discounting or factoring  is far better than many traditional forms of bank finance.

Up until the last few years many businesses would use their overdraft to fund their working capital requirements. However as credit terms have been continually stretched many business have found it difficult to operate within agreed limits. Traditionally an overdraft facility has been set against the trading performance of the business and the amount obtainable will more often than not have been restricted by the ability of the business to provide tangible security in the form of bricks and mortar

Invoice financing is totally secured against the unpaid invoices which are assigned to the particular finance company.  Unless an overpayment is required no other security is required. The great advantage is that the facility will grow with the business. More importantly providing the business is trading within the terms of the agreement there is no risk of the facility being withdrawn. This is not the case with a traditional bank overdraft which is payable on demand. We have seen many instances recently whereby   the banks have withdrawn the facilities with absolutely no notice resulting in very difficult cash flow problems for the business. our advice is always go for a cash flow facility rather than the overdraft.

Which is the best invoice discounting company

November 13th, 2009

A question that we get asked most regularly. The simple answer is that it depends on the particular needs of each customer.    It also depends on the length of time the business has been trading , is it profitable and the quantity and quality of the ledger. If it is a very clean ledger ( or debtor book ) in that it is not difficult to collect payments then in theory there should be many finance companies to choose from.

However you must take into account other considerations. Certain finance companies are very good at servicing certain debt.  There is only one high street bank that is any good with foreign and international debt and there is only one bank based invoice discounting company that is any good at financing contractual debt. And guess what they are two completely different banks. Some banks are also good at offering built in credit insurance and others can be difficult when it comes to setting funding limits. Most banks and independent factoring company are fairly similar when it comes to pricing however the cheapest deal isn’t always the best.

A customer quoted to us recently that he wished he had chosen a high street invoice discounting company but rather that he he had had gone with a independent finnace company that traditionally could be more flexible and thus providing more cash against his invoices.

Lloyds bank restricting my invoice discounting facility

November 12th, 2009

Hardly no surprises that any business currently using a factoring or invoice discounting facility with LLoyds bank may be having their credit lines severely restricted. XL Business Finance has seen three customers this week all wishing to move from LLoyds due to a restriction in cash availability. On Tuesday this week LLoyds bank announced the loss of 4500 jobs some of which will go in the collections department. We are unclear if itis from their cash flow arm LLoyds TSB Commercial Finance however the bank is obviously under pressure and as such we are starting to see businesses being affected by their noncommercial view.

Traditionally it can quite a long winded affair switching invoice discounting or factoring companies especially as many finnace companies will tie in their customers for a least a year and will require to provide 3 months notice if they wish to switch funder.  Sometimes it  my be possibel to buy one elf out of a deal with the support of a new finance company however even then it might be a  costly exercise. The good news is that many of LLoys customers have been signed up to a short one month notice contract and it is these customers that we are seeing take advantage of their ability to switch finance company. If in doubt we can check any documentation on your behalf and give you some advice from an independent view point.

Improve cashflow with Invoice Finance

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.

Asset Finance Leasing cont

November 10th, 2009

High street finance companies are what we would balance sheet lenders. They are more interested in the strength of the business in terms of how long it has been trading, how profitable it is , the size of the net worth and the affordability of the new project or capital investment. If your business ticks all the boxes than they will offer a hire purchase or finance lease facility. High street finance companies take less notice of the actual piece of equipment or machinery you are purchasing however tend to categorise different types of equipment offering differnt levels of security.

Asset lenders are less interested in the balance sheet but more in the actual value of the equipment. Asset lenders will obtain a valuation of the equipment or machinery to be financed or refinanced and Will lend a percentage of its perceived forced sale or trade value. Therefore it is quite possible that a business might buy a piece of kit costing £100k and an asset lender will put a forced sale value on it of £60k however might only lend £48k needing the customer to find a substantial deposit.

Therefore if you are struggling to obtain a traditional finance lease or hie purchase facility with a high street laender or balance sheet lender it is possible you might find yourself caught between a arock and a hard stone. Your company isnt strong enough on paper for the high street lenders but the value of the equipment isnt enouugh to make the project work because you dont have enough deposit. Unfortunately there is very little inbetween at the moment as their are fw finance compnaies left in the middle ground.

To make sure you have the best chance of succeeding with a high street finance company you need to make sure that the proposition is presented to the finance company in the best possible light. XL Business Finance has over 10 years experience in dealing with complex proposal on behalf of customers and our expertise in this area will greatly enhance your chances of success.  If the high street is a non starter we also have the expertise to deal with the asset based lenders to structure a deal which may enable you to move forward.

Asset Finance Leasing

November 9th, 2009

The last 12 months have certainly been difficult in terms of organising asset finance. Finance companies are taking are very strict approach when it comes to underwriting. Many of the bank owned  high street finance companies  are only lending to their own customers and some are not lending at all. Bank of Scotland and Barclays appears not to be providing any leasing deals at all and others are doing so on a restricted basis.  HSBC will only provide facilities of over a £100k and Lombard are only lending to Nat West and RBS customers.  Therefore thee are only a few options when it comes to hire purchase and asset finance leasing. Thankfully XL Business Finance has over 10 years experience in the market and has the means to add value to any capital expenditure product by knowing which companies are in the market and which are not.

Although there are signs that the economy is picking up we are still technically in a recession and I believe that it will be many years before we get back to how the asset finance market was before the credit crunch. It is virtually impossible to obtain funding for intangible investments unless you have a very strong balance sheet or you are prepared to pay a very high interest rate and provide personal guarantees. Therefore computers, telephone  systems  and any high tech equipment is even more difficult to obtain funding for in this difficult market. There are a few finance companies prepared to advance £10k per customer on this basis but it is no guarantee.

Otaining  finance for what is perceived to be machinery and equipment which you may think has good value for security purposes can also prove difficult. Unless you can get finance from a high street funder which look at the strength of your balance sheet you might be caught between a rock and a heard stone.  More on this later.

Invoice Discounting

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.

Refinance existing plant and machinery

November 4th, 2009

The ability to release cash from the equity in existing plant and machinery is providing a life line for many UK based businesses. Cash can be released for just about any purpose and so long as there is some value in your equipment a deal can be done for just about any type of company irrelevant of its trading performance.

It is even possible to release cash even if your existing finance agreements have not reached the end of their term. Providing you have a copy of your finance agreement XL Business Finance will be able to do a rough calculation of your settlement figure. If you can also provide a list of your equipment we can obtain a rough valuation for refinancing purposes. As a minimum we will need age , make and model of the equipment you wish to refinance. There re a number of potential finance companies that are able to refinance existing plant and machinery and all use slightly different methods to value the kit for refinancing purposes. Remember that this is a very specialist market asset refinnace  and that any valuations are obtained on a worse case basis or forced sale basis. XL Business Finance has the expertise to approach the finance that will provide the best valuation for your particular equipment. One finance company may be strong in the construction market for example whereas other finance companies might be good at printing equipment. We guarantee we get you speaking to the most appropriate funder for the type of equipment to be refinanced and for your particular circumstances.

Invoice finance

November 4th, 2009

Invoice Finance is still the fastest growng commercial financial product available. The ability to release cash against unpaid invoices can provide the financial freedom which the traditional banking products so often fails to deliver. The good news is that there are still many finance companies offering invoice finance and as such it is relatively easy to obtain funding. Which finance company is best for you depends on the your particular circumstances. XL Business Finance has experience in organising invoice finance for businesses turning over £70k to big PLC  companies with turnover in excess of £30m. We have the expertise and knowledge to help guide you through the manydifferent  options and match you with the most appropriate finance company.

As with any type of finance high street banks try to be all things to all men and in reality don’t often do the job as well as an independent finance company. An independent  invoice finance company is not bank owned and obtains funding from private and independent sources. Therefore an independent invoice finance company tends to be a little bit more flexible and approachable than a high street finance company. However there are certain high street banks that are particularly good in niche areas. For example one high street bank is very good at doing international trade finance whereas another high street bank is very good at doing construction invoice finance. The point is that a good independent factoring broker can save a business time and money by recommending the most appropriate finance company.

Obviously there is other criteria which we take into consideration. The geographic location can be important but not paramount. Te length of time the business has been trading. The profitability of the business. The quality of the debtor book to be funded and whether there is any adverse credit all need to be taken into consideration. And the good part is that our service is totally free of charge. It doesn’t cots you a penny to be put in touch with the most appropriate invoice finance company.

Leasing plant and machinery

November 2nd, 2009

As an independent finance company we are certainly busier than we have been for the last 12 month. The level of enquiries and business written during September and November has been back to pre recession levels. Wether this remains at this level remains to be seen but  there are certainly some encouraging signs. Hopefully we have finally turned the corner however we envisage it will be many months and possibly years  before the financial institutions and banks start freeing up their lending criteria.

This time 12 months ago we were seeing many businesses putting plans on hold and unwilling to commit to any capital expenditure projects. And who can blame them not knowing the severity and duration of the forthcoming recession. Now 12 months on and I think the general consensus of opinion is that whilst things are not great they probably are not going to get any worse. Therefore if a business can make their plans and plant and machinery investments  work in the current climate there is an attitude of lets crack on with it because when business really picks up we will be well placed to reap the rewards.

Although we are hopefully out of the recession banks and finance companies will remain to be tight for months and even years to come. Combined with the lack of liquidity in the finance markets it will be still remain difficult to arrange hire purchase and leasing facilities for the foreseeable future. There are few leasing companies actively lending and many of the banks are looking after their own customers and only the good ones at that. Fortunately there are still a few funders still lending money and a good independent finance broker will be able to source the most appropriate funding.  It is most important that all the correct financial information is presented to the appropriate finance company to ensure the best chance of success.  This is where XL Business Finance has many years of experience and expertise and we will endeavor to make sure your finance needs are fullfilled.


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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