Increasing number of SME's using Invoice Finance

It's been reported that the number of SME's using invoice finance to increase working capital has risen dramatically in the second quarter of 2010.

It was also reported in the same article that banks have to reserve capital against overdraft facilities even when not fully utilised.

This second point probably explains why many SME's are being pushed into their banks invoice financing facilities (as revealed by our customers) by various means. Once there, what awaits the newly hooked SME is a raft of charges that either didn't exist or are much higher than before the "credit crisis". Once all charges are taken into account there are much cheaper factoring lenders than high street banks out there!

If your business is being pressured into any kind of factoring deal then please feel free to contact us for a no obligation & confidential discussion about alternative commercial lenders.

Business Leasing - A 100% Commercial Loan

When searching for Commercial Loans to raise capital for your business the closest you can get to a 100% finance option is Business Leasing! Typically one monthly rental payment suffices as a full deposit to purchase that new asset such as equipment, plant or machinery. The cost of installation, maintenance and warranty could be added to the loan too!

If your company needs new equipment then business leasing could be beneficial. Some of the circumstances where leasing could be the logical choice are:-

• You don't have the cash to buy your new equipment but need that asset today.


• You do have the cash, but reducing your working capital may compromise your business.


• You don't need new plant or machinery but you do have exisiting assets that have a good residual value against which a sale and business leaseback finance facility could be utilised.


• Because you can fully offset monthly payments against tax, it makes commercial sense to lease for your business.


• Your business assets have a short useful life span and need to be replaced regularly.

For more information we recommend further reading at our specialist Leasing Finance pages.

More Commercial Finance News

One of the main unsecured Payroll Finance Lenders in the UK temporarily stepped out of the market place last week leaving just one active lender. This payroll lender currently expects to return once new funds have been raised, maybe in a couple of months.

UK Businesses in their quest to raise working capital are increasingly turning to equipment leasing and more specifically selling and leasing back existing assets. This financing method is typically a much easier way to generate cash for a company and expect requests for leasing to increase in popularity over the coming months. Of course all the main benefits of leasing such as the tax advantages are the same whether equipment is new or re-financed!

Why Do Businesses Choose to Lease Equipment rather than Buy?

When seeking any type of commercial finance, there are few areas of business funding that offer 100% finance availability. One area where 100% finance is available is asset based finance for equipment such as plant & machinery, computer hardware etc. In fact it is possible to lease any kind of equipment or asset, in many cases without any deposit, advanced rentals or extra security.

Many people in business think that leasing is for companies short of cash, in some instances that may be the case, but a little research shows that even the biggest companies use leasing to access assets essential to the running of their business.

One reason this finance option is a regular choice is the relative ease with which a leasing arrangement can be set up along with flexible payment terms, plus, other financial tools will still be available to the company. However the main factor in deciding to lease is cost, for most businesses the overall cost of leasing any particular asset or piece of equipment is lower than a cash purchase once loss of interest on cash on deposit and tax rules and deferred VAT payments are taken into account. It should be noted here that this rule may not hold for all businesses for example, start up companies or where poor credit history applies. Whatever individual circumstances apply, your accountant can offer professional tailored advice on any likely savings.

Unlike other finance options leasing offers fixed payments for the term of any agreement therefore easing cash flow management by not reducing working capital available to the company. Other major benefits of leasing is the possibility of upgrading or keeping technology up to date if the right finance option is taken out, adding new equipment to any arrangement is also very easy, especially once a payment record has been established. If you do not take ownership of the leased asset at the end of the term then the lender will have responsibility for it's disposal.

Finally, by opting to lease, funds can be retained within the company to aid growth, but also the opportunity to acquire access to more or higher specification equipment can add significantly to that growth.

I recommend you visit our Business Equipment Leasing page for more information on the topic of leasing.

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