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As you will gather if you care to read through any of blogs that this is a favourite subject of mine. And for good reason too. We have seen a number of what looked like very strong businesses fall foul to the banks in terms of having too many eggs in one basket. Although the banks will never publicly admit there appears still to be a tendency to call in their security if they think they have half a chance of clearing their debt. A bank that has a debenture over the business can appoint an administrator at any point they wish to do so. And how do they obtain a debenture. well you would normally give it when you take out an overdraft. Just one of those documents that they slip under your nose when signing all the other paperwork. Overdrafts are always repayable on demand and for this reason we believe that any form of invoice finance is a far better alternative.

Invoice finance which can either be factoring or invoice discounting cannot be withdrawn at a moments notice and so long as you are operating within the terms of the facility should provide you with a reliable and consistent form of cash flow finance. Unlike a bank overdraft which is secured by bricks and mortar and or a personal guarantee invoice finance is secured against your unpaid debts. So long as your customers pay their debts you should never be at risk. In addition it is often possible to obtain credit insurance for if any of these customers god forbid go bust on you.

Invoice Finance is the means of obtaining cash against unpaid invoices. More and more debtors or customers require up to ninety days credit terms in order to pay for their goods and services. Invoice finance provides up to 80% of these invoices immediately providing a valuable working capital facility.

Confidential invoice discounting is a form of invoice finance and as the name suggests the facility is provided in a format whereby your customers are unaware that you are discounting your invoices. Many businesses for a variety of reason would rather keep these matters confidential. However confidential invoice discounting is not on offer for every type of business. Invoice discounting can be susceptible to fraud and as such a business must be well established, be profitable with a sound and profitable trading history. A suitable credit control system must also be in place which the potential finance company will require to check o ensure you are capable of collecting your invoices.

Factoring which is similar to invoice discounting provides credit control as an additional feature. The factoring company will chase your customers ( usually by phone) on your behalf to ensure your invoices are paid in an efficient and timely manner. As your customers are aware that you are factoring your invoices and the finance company is in regular contact with your customers the facility is less susceptible to fraud.  Therefore just about any type of business will be able to obtain a factoring facility. New starts, loss making businesses, phoenix companies are all welcome to apply!

We had a request yesterday from a web development company wanting some form of  invoice finance. They had aboiut fifty customers on twelve month contracts all of which paid a ten percent deposit on the work to be done and then on a monthly basis thereafter. They were invoicing at the beginning of each month for the work to be carried out for the following month. Invoice financing only works for work that has already been carried out and that is being invoiced with credit terms of thirty, sixty or ninety days. Although we were not able to help we put this enquirer in touch with a company that can offer contract finance , a totally different product.

Invoice Finance can either be in the form of factoring or invoice discounting. As a business you provide goods or services to your customers and provide credit terms. Invoice finance provides immediate cash of up to 80% of these unpaid invoices on a revolving credit basis. Whether it is factoring or invoice discounting that you desire as son as your customer payd the outstanding invoice you receive the remaining 20% of the invoice less any charges.

Factoring provides crdit control in addition to the cash and is provided on a disclossed basis so theat your customers are awrae that you are factoring your invoices. Becauseth the factoring company is able to verify invoices this form of funding is also available for new start businesses, insolvent or businesses that have been struggling

Invoice discounting is provided in a confidential manner and as the finance company is unable to verify invoices this form of invoice finance tends to be made available for established businesses with a good performance history who are unklikely to take the invoice discounting company for a ride.

XL Business Finance has years of experinec in helping businesses choose the right invoice financing company for their particular needs