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Archive for the ‘Trade Finance’ Category

Far better margins if we buy direct from abroad

Monday, September 13th, 2021

We have a client who is a re-seller in the plumbing sector.

For years they have bought goods from UK manufacturers but they have the option to buy the same goods from China for a far better price.

Currently their suppliers give them credit terms but buying in bulk from China, they would have to pay with the order.

The company already uses invoice finance and they simply do not have enough cashflow to do this. We introduced them to trade finance.

The trade finance company advances them the money to pay for the goods and then when the goods are sold to their business clients, the trade finance company also provide the invoice finance until the invoice is settled.

A complete solution from buying the goods to have their customers invoice settled in full.

ANNUAL INVESTMENT ALLOWANCE INCREASED TO £1 MILLION AND NEW CAPITAL INVESTMENT ALLOWANCE ANNOUNCED IN THE BUDGET

Monday, November 5th, 2018

The Annual Investment Allowance (AIA) is to be increased from £200,000 to £1million from 1 January 2019.  The announcement should provide a welcome boost to business investment during the Brexit transition period and will return to the £200,000 limit in January 2021. Businesses can claim 100% capital expenditure incurred on most items of plant and machinery of up to £1million a year.

In addition, a new allowance was announced – the ‘structures and buildings allowance’ (SBA) which will give tax relief on eligible construction costs on non-residential buildings and structures from 29 October 2018. The relief will be given at 2% a year on a straight-line basis over a 50 year period.

Under the current system, buildings and structures do not qualify for capital allowances, but allowances are available for plant and machinery inside a building.  Structures and buildings qualifying for the new allowance will include offices, retail and wholesale premises, walls, bridges, tunnels, factories and warehouses. Capital expenditure on renovations or conversions of existing commercial structures or buildings will also qualify. The new allowance will not apply to dwellings or to expenditure on the land itself.

Other announcements in the budget affecting business include:

  • The personal Income Tax allowance for 2019-20 will be increased to £12,500
  • Basic rate band increased to £37,500
  • Higher rate band £37,501 to £150,000
  • There is no change to the rate of Corporation Tax, which stays at 19% for the financial year beginning 1 April 2019.
  • Two significant changes to Entrepreneurs’ Relief were announced:  Claimants must have a 5% interest in the distributable profits and the net assets of the company to qualify, and separately that the minimum period, during which certain conditions must be met to qualify for the relief, is being increased from one to two years.
  • From 1 April 2020, the amount of payable tax credit that can be claimed under the R&D SME tax relief scheme will be limited to three times the company’s total PAYE and NIC payments for the period. Any loss that cannot be surrendered can be carried forward and used against future profits.
  • The changes recently made to IR35 arrangements in the public sector are to be rolled out to the private sector. The widening of the off-payroll working rules will take effect from April 2020 for medium and large organisations. Small firms will be exempt.  These changes could see thousands of contractors and consultants paying more in NI contributions and income tax.
  • Smaller retailers in England, occupying shop premises with rateable values under £51,000, should benefit from a cut of 1/3 in their business rates bills for 2 years from April 2019.
  • The present VAT registration limit (£85,000) and deregistration limit (£83,000) will continue to apply for a further two years; until 31 March 2022.
  • The special rate of writing down allowance is being reduced from 8% to 6% from April 2019.
  • From 6 April 2020, the government will change the insolvency rules so that taxes collected on behalf of employees and customers, primarily employees PAYE and NIC and customers VAT, will be treated as a preferential creditor on winding up rather than distributed to other creditors.

 

Hundreds of Grants for UK Businesses

Thursday, February 15th, 2018

Local Government departments and councils who have regeneration targets often meet these goals by providing grants to businesses for specific projects. The project will tackle the issue (for instance: reducing unemployment or filling empty shops) by rewarding the business in the form of a grant to employ staff or refurbish shop premises.

Although this ‘free money’ is available – it is rarely promoted because councils do not have the capacity to cope with the high demand. Therefore eligible businesses often miss out on this funding which has the opportunity to be influential to the success of their businesses.  We are experts at both searching for and applying for grants. Some of the funding currently available includes:

• £10,000 for businesses who develop digital innovation
• An award for businesses who improve communities in Greater London
• £100,000 of branding and marketing support for food businesses
• £20,000 for young entrepreneurs to develop new ideas
• Up to £50,000 for Scottish businesses that promote workplace equality
• Up to £12,000 for farmers to buy new equipment
• Up to £250,000 for businesses in Leeds for capital investment
• 21 different funding programmes for businesses in the Construction industry

There are many more grants, awards and training programmes across the UK. Contact us today to find out if there are any relevant schemes available for your organisation.

Scale-up Businesses struggle to find funding

Monday, January 29th, 2018

A scale-up business is recognised as a young organisation with at least 10 employees which grows by an average of 20% each year. Scale-ups are of huge importance to the UK economy providing jobs, inward investment and innovation.

However, scale-up businesses often find it difficult to source finance from mainstream funders due to a lack of trading history, asset value or limited management experience.
Grants and regional funding options exist, but many are for very early-stage development rather than growth. Bank Loans are an option for companies with solid cash flow that can support the interest payments. However, new global capital regulations designed to make banking more stable have made it harder for banks to offer large overdrafts, and so alternative options are often required by businesses looking to raise finance.

Invoice finance is a popular way for scale-up business-to-business (B2B) firms to unlock vital working capital as it grows with your business. Working capital finance options for high-growth business-to-consumer (B2C) firms are less obvious. However, a relatively new type of lender is emerging offering merchant cash advances where businesses repay a fixed percentage of revenues.
Many crowdfunding platforms exist, including equity and non-equity options. When it comes to investing in new equipment, there are plenty of options available. Asset finance, otherwise known as asset leasing or lease rental, has been around for many years and for good reason, but not everyone is aware of how it can benefit them.

Asset leasing is a tax-efficient and flexible way to purchase the equipment you need without compromising your cash flow, and is suitable for all industry sectors and any size of business. Terms are available from one to five years with only a minimal deposit required in most cases.

Ultimately, there’s no easy answer for financing a scale-up and businesses may need to share the risk and look at numerous options. It does depend on your approach to risk, your attitude to giving away part of business, and your company’s ability to finance a debt.

To see how we can help you grow your business by providing funding options to suit your needs, contact XL Business Finance today for an initial discussion.

Manchester – 0161 980 0577
London – 020 3301 4540
xlbusinessfinance.co.uk

Supply Chain Finance

Tuesday, May 28th, 2013

If you have confirmed purchase orders it may be possible to obtain finance via supply chain finance as was the case for a dried fruit exporter.  XL Business Finance was recently introduced to a business via its bank that had won a substantial contract with a US business supplying dried apple snacks. The requirement for 100% cash covered letters of credit was unworkable and impossible for the client to finance. XL Business Finance  was able to arrange e a $2m solution to procure apples and pay the factory. The deal was secured on credit insured payments from the US buyer. Supply chain finance can either work on a stand alone basis or in conjunction with your existing bank facilities.

Do you need trade finance?

Tuesday, October 18th, 2011

Your goods are pre sold but you don’t have the working capital to purchase your goods in advance. XL Business Finance has over 10 years experience helping businesses with trade finance facilities and has a number of alternative solutions.

For one reason and another many businesses are struggling to obtain financial support from existing high street banks. This is never more true for businesses looking to import goods and products from abroad. The problem is that you have an order in the UK,  your goods have been pre sold, however you don’t have the working capital to purchase the goods in advance. Whilst banks do a certain amount of trade finance it is usually for existing and well established customers with very strong and profitable balance sheets. Banks generally will not support businesses trading for less than 3 years and very rarely will help businesses with marginal credit.

The good news is that there are a number of independent trade finance companies that may be able to assist. It will certainly be easier if your goods have been pre sold as not only will the stand alone trade  finance companies potentially help but also there are a number of factoring companies that also offer trade finance solutions. This is the preferred option for many businesses as a complete financial solution is provided form start to finish. A trade facility is provided for the business to import the goods and once an invoice has been raised in the UK upon delivery the trade finance facility is repaid via a factoring or invoice discounting facility. This factoring facility is repaid when the customer pays the invoice at a agreed future date, ie 30,60 or 90 days hence.

Trade Finance explanied

Thursday, April 28th, 2011

Trade finance provides the ability for business to purchase goods and stock  from within or ouside the UK. The goods can either be pre sold or unsold. Funding is available for just about any scenario however it does depend on a businesses actual circumstances. Just because a business has been declined by a high street bank it doesnt mean funding wont be available from an independent or specialist trade finance company.

For obvious reasons it is far easier to obtain funding for goods that have been pre sold and in certain circumstances 100% funding can be arranged.  XL Business finance can help you obtain the appropriate funding.

Need 100% Export Finance?

Monday, April 11th, 2011

A business manufacturing prepaid telephone cards recently approached XL Business Finance needing funding for 3 single debtors all of which were based on the continent. Having been declined finance from their own high street bank they were delighted to find that a factoring and export finance facility was available via a specialist factoring company.

Although the provider was a substantial financial institution and one of Europe’s biggest banks this particular factoring company were not interested in taking on the clearing banking or doing the commercial mortgage. Therefore the business was able to carry on using their existing finance company for clearing which kept the overall banking relationship on an even keel.

 

Import Finance

Sunday, April 10th, 2011

XL Business Finance has recently helped a business import wine from France. Although the business had recently been formed and was therefore unable to obtain funding from a high street bank, the business had  a large confirmed order from a well known supermarket. The import finance company was able to provide a finance facility on the back of the confirmed order. 100% funding was provided to the customer to import the wineand upon delivery to the supermarket a factoring facility provided an additional 90 day funding. A complete funding solution was provided from start to finish. Stand alone import finance is also available but it certainly helps when it comes to obtaining funding if you either have confirmed orders or a track record

International Trade Finance Explained

Saturday, April 9th, 2011

Trade finance can cover business exporting goods  and services ( export finance) or it can cover business importing goods and services ( import finance). Whilst certain high street banks can be very good at providing import and export facilities there are alternatives that can help businesses that are not eligible for bank funding for whatever reason. Again with any type of funding it is possible to obtain alternative views from specialist and independent trade finance company that can provide viable, flexible and competitive alternative to the banks. It is quite often possible to obtain a higher level of funding due to their expertise in particular market.

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