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Release cash against unpaid invoices with debt factoring

Wednesday, January 19th, 2011

Following the traditional quiet  period over Christmas many businesses may find themselves short of cash over the next few months. The good news is that it maybe possible to release cash against unpaid invoices using debt factoring or invoice discounting.

Factoring is available for just about any type of business that provides goods or services on credit terms. Factoring is available for new start businesses, businesses that have had trading difficulties as well as any blue chip companies. This kind of debtor finance is very useful for businesses that have maybe approached their own bank but for one reason or another haven’t been able to obtain funding.

Invoice discounting is traditionally provided in a confidential facility and as such your business has to be stronger and more established to be eligible. Again invoice discounting can release cash against unpaid invoices and provides a very useful working capital facility.

Both factoring and invoice discounting are provided by banks and independent lenders. In our opinion independent lenders are far better at providing factoring because credit control that is provided with factoring is a very important aspect of the service. Independents that specialise in factoring tend to provide a much more comprehensive service and as such the cheaper banks isn’t always the best option

Turn your invoces into cash with debt factoring

Wednesday, 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.

How debt factoring works

Thursday, February 11th, 2010

Debt factoring provides an alternative to a bank overdraft for cash flow purposes. Up to 85 % of outstanding debtors are releases as you raise an invoice. An overdraft will be restricted in size depending on the amount of aavailable security aavailable. A factoring facility will grow with the business and will provide a available source of working capital as a business grows. In addition a certain amount of credit control is provided in the process. A minimum charge for running a factoring facility is circa £2-300 per month. For a small business this may seem allot but compared with the cost of employing a credit controller we think it provides pretty good value for money. The minimum turnover to make it cost effective would be in the region of £80k per annum.

There are two charges for a debt factoring charge. First the interest rate for borrowing money is comparable to a bank overdraft. You will be charged at 2% over base or libor depending on the finance company. Beware some finance companies charge a minimum base rate and as such it is prudent to check the small print to ensure you are comparing apples with apples. The second charge is the service fee for providing credit control and debt collection. Although a bank based factoring company may offer a very cheap service charge they do not always provide the best service. Certain banks will only chase by telephone your top 3 customers leaving the rest to be chased by letter. Therefore debt turn is not always the best. A specialist factoring company will telephone all your customers and as a result get the money in through the door quicker. This aspect of the factoring service is very much about adding value to your business and as such the cheapest is not always the best.


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.

XL Business Finance Limited are authorised and regulated by the Financial Conduct Authority FRN 718737).

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.


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