In our opinion most definitely yes! Invoice finance will provide instantaneous cash against your unpaid invoices. The facility within reason will grow with your business and in terms of security it is far less onerous than any bank overdraft facility.
The problem with overdrafts is that it is very difficult to get an adequate facility unless the business is very profitable or a business has a significant amount of property they can put up as security. And less face it 99% of businesses nowadays don’t fall into this category. The other big problem with bank overdrafts is that they are repayable on demand. If you file a poor set of figures or present your bank manager with a iffy management accounts you run the risk of having your overdraft pulled from under you. Once upon a time most people new that this was the case but had never actually heard of it happening. Unfortunately nowadays it is happening all the time. We are constantly hearing of horror stories of high street lenders being unable to renew overdraft facilities and leaving businesses in a right old pickle.
This would never happen with an invoice discounting or factoring facility. These forms of debtor finance are secured against the unpaid invoices. The facility grows with the business and the invoice finance facility use their expertise to collect the debt on your behalf. The problem is that banks will try and persuade their customers to use their own factoring companies and in our experience these bank based lender don’t always provide the same flexibility and expertise of some of the independent companies.
XL Business Finance has over 10 years of helping and advising businesses as to which is the best funder for their specific requirements. For a totally impartial and independent view give Mark Redman a call on 07748 635 206.
