Is Your Business Financially Robust? Protect Your Business With Alternative Forms Of Cash Flow Finance! by Mark Redman of XL Finance

The on-going “euro crisis” has the potential to make borrowing money from the banks even more difficult. At a time when many businesses are struggling for working capital this could be more potential bad news for many businesses. The good news however, is that there are smaller and independent finance companies willing and able to provide alternative and viable funding solutions to the high street banks.

Invoice finance such as factoring and invoice discounting is one of the fastest growing forms of funding. Once often viewed a lend of last resort, factoring and invoice discounting is the preferred choice of finance for many SME businesses.  Invoice finance releases cash against unpaid invoices typically at 80-85% providing much needed working capital.  Unlike a bank overdraft which is often repayable on demand and is restricted by the level of available security, a factoring or invoice discounting facility will grow with your business and provide a long term working capital solution.

Whilst  high street banks provide such facilities it is widely recognised within the financial community that there are many independent alternatives and specialist invoice finance  companies providing a much higher level of service, expertise and flexibility.  It also makes good financial sense not to have all your eggs in one basket and have a separate invoice finance provider to your clearing bank.

Which funder is best for you will depend on the circumstances of your business. Whilst there are many factoring and invoice discounting companies many have slightly different areas of expertise and specialise in slightly different sectors and business types. Turnover, length of time in business, degree of profitability, size of your debtor book, contractual debt, export and import requirements, and geographic location are a few of the factors that need to be taken into consideration.

A good independent factoring broker will be able to narrow the choice of many down to 2 or 3 of the most appropriate providers.  XL Business Finance has been helping business for over 10 years and providing expert knowledge to ensure that the most suitable funding solution is found.

Examples include:

FACTORING – New start up Printing Company. We chose a small local funder so the customer was never more than one or two phone calls away from decision maker /director.  A highly level of customer service and hands approach ensured that debts were collected in a professional and timely manner enabling the owner to get on with running his business.

CONSTRUCTION FINANCE – Building Company.  This large national based  builder had previously been advised by his bankers that he wasn’t fundable due to a contractual element to his debtor book. A specialist finance company was able to arrange funding against staged invoices and contractual application for payments.

INVOICE DISCOUNTING / EXPORT DEBT – Engineering co. A 5.0m facility was provided via a large international finance organisation providing export funding as well as standard domestic invoice finance.

IMPORT FINANCE / FACTORING – Wine Importer. Against presold goods to a large UK chain of supermarkets an import facility was provided to the customer to import cases of wine. On delivery to the customer’s premises and on issuing an  invoice to the customer the factoring repaid the import facility providing a 100% funding solution from start to finish.

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