News

Without a doubt we would recommend invoice finance over a bank overdraft any day of the week. There are obviously exceptions of course. Invoice finance provides 80% of your unpaid invoices as soon as you have raised your invoice. It provides a flexible approach to your working capital requirements. Obviously this wont work if you are getting cash on delivery or on the point of sale. Uner these circumstances you would need an overdraft facility to provide you with adequate working capital.

There are many advantages to invoice finance compared with a bank overdraft. Overdrafts are normally secured aginst property and are fixed at a set amount with little scope for increasing as your business grows. More importantly it should be noted that a bank overdraft is repayable on demand. If your business takes a turn for the worse potentially the overdraft can be withdrawn without notice. Unfortunately in the current economic climate we have seen happen all too often. This will never happen with an invoice finance facility.

Invoice finance can be provided by way of a number of products. Factoring in addition to providing cash against unpaid invoices provides a credit control facility. Invoice discounting can be provided on a confidential basis and as such only provides a working capital facility. Invoice discounting is suitable for more established businesses who will have their own credit control facilities in place. Different finance companies provide slight variations on these two products but in main these are the two most common invoice finance products.

A quick search on google will reveal hundreds of potential finance companies. Banks are good at invoice discounting however there are independent companies that are capable of providing an equally acceptance product. As a rule of thumb independents are better at providing factoring products. XL Business Finance can help you find the most appropriate finance company.

The ability to raise cash against unpaid invoices is probably a more a necssity than a luxury in the current econimic climate. There are so many invoice finance  providers to choose from and it is imperative that you choose the right funding partner for your business. It is no point going with a finance company that provides a headline rate of 90% against unpaid invoices if they are very restrictive on individual credit limits and you only end up with 60% funding. XL Buusiness Finance has over 10 years experience in the factoring and invoice discounting market and can help your business find the most appropriate funding partner.

Any search on google will reveal millions of results for invoice finance. There will be banks , independent finance companies and brokers all vying for your business. An independent finance company is  an actual lender that is not bank owned,  whereas a broker is not a lender and will take a commission from the finance company for introducing you to the most appropriate funder.  During a recession it is important that you choose the right funding partner. An independent finance company will tend to be more flexible than a high street bank.  There are many independent factoring and invoice discounting companies and which one is most suitable for your business will depend on your geographic location, how long you have been trading, the quality and number of your invoices and whether you are profitable or not. If any part of your debtor book is contractual than there are only one or two finance companies which can potentially provide funding for your business.

As a rule of thumb if you need a factoring facility with full credit control we would not normally recommended a bank. The independents tend to be better at credit control and are normally better at collecting the debt. If your business is very profitable and squeaky clean then invoice discounting via the banks might be more beneficial. However for every high street bank we would be able to recommend another invoice discounting company that is bank owned but has their own autonomy.

It is now possible to obtain one off factoring against a single debtor. One finance company has entered the market whereby once you are set up with the finance company you can pick and choose which invoices you  factor.

Needless to say this facility will not work if the debtor is of a poor quality and has  a bad credit rating. Single debtor invoice finance can sit alongside other banking facilities however it wont work if  you are already factoring or invoice discounting.  A single invoice can be discounted at any point up to 90 days of it being issued. The minimum size invoice that can be discounted is £5,000 and there is  an initial  minimum charge of 5% for the first 21 days that the money  remains unpaid. Depending  on the remaining number of days the invoice remains unpaid a small amount accrues on a daily basis over and bove the initial 21 days.

This facility can be used for a one off invoice however it can also be used as as little or as often as you require. There is no on going fee just the standard charges and and when you decide to factor your invoices. The advantages of this kind of funding are obvious particularly for those businesses not wishing to be tied up for a full factoring facility. In addition if  a business finds its self using the funding more and more often then it is possible to switch to a full factoring or invoice discounting facility.