There are a number of schemes available to UK businesses during this time of uncertainty.
Archive for the ‘invoice factoring’ Category
GOVERNMENT SUPPORT FOR BUSINESS
Wednesday, April 1st, 2020Scale-up Businesses struggle to find funding
Monday, January 29th, 2018A 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
Considering Invoice factoring?
Wednesday, February 1st, 2012
Invoice factoring is the immediate injection of cash against value of outstanding invoices. Also known as account receivable factoring, invoices are raised up to 90% of the invoice value is released within 24 hours, the remaining 10% is paid, less a small service fee, once invoice factoring payment is received from the customer.
A factoring facility provided by the most appropriate finance company will leave you free to unlock the true potential of your business rather than spend your time juggling bills and chasing customers for outstanding invoices.
Choose the wrong finance company however, and it could have disastrous consequences on your business.
The factoring company which will best suit your business depends on a number of differing factors.
Geographic location – independents can be regionalised rather than nationalised.
Turnover – Some Factoring companies specialise in a certain turnover level.
Length of time trading.
Credit rating – Banks will only fund businesses with reasonable credit.
Number and quality of invoices.
Concentration levels – Some funders may exclude you if you have only one or two customers.
Any foreign invoices? – Some factoring companies have an international presence.
Is part of your business contractual? – There are only two factoring companies that can provide a facility.
Do you need credit insurance? – Banks and independents provide very different types of credit insurance.
Do you need an overpayment? – Certain factoring companies can provide a top up via an EFG loan.
Do you have any other borrowing facilities with your bank? – This may or may not work in your favour depending on the circumstance.
We advise;
Always see two and a maximum of three – any more and the factoring companies won’t take you seriously.
Make sure you understand the charging structure – rmember the headline rates do not always show the full picture.
Make sure you are comfortable with the individuals involved in the business.
Make sure you know the credit limits of your top ten customers.
Don’t be afraid to ask questions and arrange a visit to their premises.
For more information please do not hesitate to call us.
Small Business Finance solutions
Friday, September 2nd, 2011
We are still living in tough times financially throughout the UK with the emphasis falling on the small business. Finance can be hard to come by for the small business owner.
Often a small business must undertake a large capital equipment investment in order to grow. The balance sheet of the business is often not strong enough to justify a Hire Purchase or Finance Lease facility.
Without capital investment the business can not grow and become more profitable. A chicken and egg scenario.
Small Business Finance is an area in which XL Business Finance has a great deal of expertise. As an independent finance broker we understand the problems of small business finance, arranging equipment leasing and machinery finance for example.
At XL Business Finance we can provide small business finance for investments from as little as £1000. This could be useful for providing tax efficient leasing for office furniture, computer equipment and telephone systems for instance.
Do not think of us as a company who provides you with a one off service to get you up and running then disappears into the night. We work along side many clients for many years providing finance solutions such as factoring, debt factoring or factoring invoice discounting facility.
As an independent factoring broker XL Business Finance can provide you with the best Business finance to meet your specific requirements.
What is a factoring broker?
Monday, June 20th, 2011It makes sense to use a reputable and well established factoring broker. They will undoubtedly find you the best option which will be invaluable when it comes to choosing the right factoring and invoice discounting company for your business.
Unlike asset finance specialists where commission is added into the deal, the factoring broker is paid by the factoring or invoice discounting company from the income they would normally charge.
There are some important factors that need to be taken into account when choosing the right finance company. The biggest factor is to identify whether your business requires factoring or invoice discounting. Not all funders are equally specialised in factoring and invoice discounting. In fact some may just concentrate on one aspect of funding. The size and length your business has been trading needs also to be taken into consideration. High street banks are not always the most appropriate funder.
XL Business finance is one of the North of England’s premier independent finance companies with established links to many of the UK’s leading finance houses. Call us today, we are happy to discuss your specific situation.
Selective Factoring
Tuesday, May 17th, 2011Selective factoring enables business owners and managers the opportunity to select which customers or transactions they would like to fund, collect and insure against a potential bad debt.
Selective factoring looks at the individual transaction rather than the whole balalnce sheet and debtor book. For smaller or new start business it enables a business to factor selective debts without the need to be tied into a 1 or 2 year contract. In difficult times this obviously helps keep costs down. For larger more established business selective factoring enables factoring of individual invoices where whole turnover factoring isnt needed or wanted.
Obvioulsy there are a number of financial institutions that offer selective factoring. We are able to find the best solution for your needs. Contact us today.
Can I get 120 days factoring finance?
Monday, November 22nd, 2010Most factoring companies provide a 90 day factoring service however with some providers it is possible to get close to 120 days without any additional charges.
With most finance companies the clock starts ticking on the day you submit the invoice, however with one or two providers the clock starts kicking at the end of the month.
Therefore if you submit an invoice say on the second of the month the 90 days don’t start until the end of that month.
For many businesses this additional working capital as customers seem to be taking longer and longer to pay. If you are factoring with a company that starts the 90 days the day you submit your invoice you potentially will pay more charges and have a reduced funding line. As soon as you hit 90 days and if your customer hasn’t paid then the value of that invoice will be deducted from your available allowance restricting available cash. In addition if there isn’t enough of an available allowance you will go over your agreed prepayment possibly triggering expensive charges for over payments.
Indeed it has been recently suggested that certain finance companies hold back cheques and don’t pay them to their clients account until a day or so after invoices become disallowed after 90 days therefore triggering charges.
Surely not. The fact of the matter is that customers should be paying within the 90 days and a good factoring company should be collecting debt in the necessary time scale. Unfortunately this doesn’t always happen and as such a few extra days funding can make a big difference.
A good factoring broker will be able to add value and select the most appropriate finance company for your particular requirements.
Invoice factoring a new start business
Thursday, April 8th, 2010It was once said that eight out of ten businesses went bust not because they were not profitable but because they ran out of cash and were unable to manage their cash flow adequately. Any new start business will probably go to their bank as a first port of call and try and arrange a bank overdraft. If you have a sympathetic bank manager and if he likes you allotyou might get a £10k facility. Anything over and above that they will want personal guarantees , register a debenture over the business and will need to take a charge over your personal property providing you have enough equity.
The next obvious step for additional working capital would be to apply for an invoice factoring facility which will release up to eighty five percent of your unpaid invoices. Now in our opinion the banks are not the best at providing factoring to new start businesses. You will be a very small fish in a very large sea and as such service and accessibility may indeed frustrate you somewhat. However because you have a small overdraft and a debenture registered you will be railroaded into using the banks in house factoring company because to use a third party funder you will need to repay the overdraft to get the debenture released. A debenture is a fixed and /or floating charge over the book debts of the business. Any cash flow facility either invoice factoring or overdraft will require that the lender has a debenture.
Ok the bank would seem the obvious choice however as soon as the business starts to grow you may find that your overall limit is restricted and you end up with less cash with the banks overdraft and factoring facility compared with a independent factoring facility who traditionally will fund your invoices to a higher level. In addition as your turnover starts to grow the problem increases further whereby it is difficult to get cash. You then start looking around for a more flexible funder and hopefully in the meantime cash flow isn’t affected beyond repair.
Commercial Mortages UK
Monday, March 29th, 2010In the current environment of banks being difficult in terms of providing new funding it might be worth mentioning another reason why a business should use another invoice discounting company other than their own bank particularly where a commercial mortgage is involved.
When a bank has got too much of a handle of a businesses finances and their is a requirement for additional funding, due to the overall exposure it might be difficult to obtain the required additional working capital. In extreme cases the banks may view this as a signal that the business is in difficulty and pull in some investigative accountants. In our opinion all banks are interested in is covering their own position and have little desire to help a business trade thorough any difficulties.
Unfortunately it is not straight forward to switch from one invoice discounting company to another invoice discounting company when a commercial mortgage is involved. One would think that a commercial mortgage is a stand alone facility which really it should be. However as soon as invoice discounting is taken out a all assets debenture will be registered against the business which will also include the property as well as plant and machinery
We have seen a few instances where the bank have in principle agreed to let the invoice discounting business go but in reality it has taken months and months to do the transfer because of the incumbent bank wont realise the book debt from the debenture. In reality a deed of priority will be required in complicated cases however these can take forever and a day and as we know dealing with the banks legal departments can be like pulling teeth,
The best way forward is always to keep different finance products separate from different finance products and as such you will never find yourself in the mercy of one bank.
Changing Invoice Factoring company
Wednesday, February 17th, 2010There are many reasons as to why a business would want to change their invoice factoring company. The main reason is through a lack of flexibility when it comes to credit limits against individual customers. It may also be that the factoring company that you are using restricts the overall funding limit. It may also be that they are no good at collecting your debt. Whatever your gripe it is not unusual for a business to want to change a factoring company and hopefully this blog will provide some information as to how to do it.
First things first, most finance companies will sign up a business on factoring for at least a 12 month contract and in some instances we have seen two or even three year contracts. In addition there will be a 3 month notice period. However some of the banks offer one month rolling contracts to customers unsure if they require the service or not. Anyone on a longer contract and feels that the relationship has totally broken down between themselves and the funder may be allowed to leave. This is unusual as most factoring companies don’t allow customers to leave that easily. It may also be possible to do a deal with the exiting factoring ompany and in addition the new factoring company may contribute to the costs of the move. The cost of moving needs to be compared with the amount of additional cash a move could release so you can decide whether a move is worth it or not.
As we have mentioned with previous blogs not all factoring companies can be all things to all men. Bank owned factoring companies operate completely differently to independently owned factoring companies. We tend to find that with factoring that requires that the funder provides credit control the independents are superior to collecting the debt.
