Factoring brokers – caveat emptor

My interest was aroused a couple of months ago when I received an email from Jasmine Tait at InvoiceBackup.co.uk telling me all about the wonders of factoring and asking whether I would be interested in factoring my debts.

I had a look at their website in which they claimed to be established factoring brokers dealing with such well known factoring companies as Touch Financial and Invoice Finance Village and I bookmarked the site intending to do some further investigations only to find that the website had disappeared.

A couple of weeks ago I received another email, this time purporting to be from Madeline Walters of invoiceadvisors.net again asking if I would like to factor my debts.

Once again I did some research to find that this allegedly well established broker’s website had only been registered two weeks prior to the email being received but the owner must have been a bit shy as the domain was registered in the name of a nominee in Panama.

The website itself looked fairly professional and the company allegedly had relationships with a few factoring companies including Hitachi (which I doubt) but rather than investigate immediately I put it to one side until today.

As with the first site this one has now disappeared and the telephone number is unobtainable.

I’m not sure what is going on here but whatever it is can’t be healthy and it’s difficult enough as it is for the poor prospect to know whether he’s getting sound advice or not from his broker without people like this muddying the waters.

On a slightly related matter I came across someone on an internet forum asking whether anyone could recommend a decent, honest and reliable factoring company and I responded that I could and suggested that he contact me to discuss the various options that might be open to him.

Up popped someone whom I had never heard of who’s forum signature suggested that he offered “Accountancy, Book-keeping, payroll, Specailist Pub Accountant ,IT solutions, Free Factoring Service” (his spelling not mine) saying that he had a relationship with a factoring company that would quote 10% cheaper than anyone else.

I dread to think who this might be but checking again with Nominet shows his domain name to have been registered just one week ago.

At least in this instance I think that the chap is genuine even if a bit of a jack of all trades and the individual who asked for advice said that he would telephone both of us.

I will evaluate the business and introduce him to the most appropriate factoring company for his needs whereas “Jack” has probably already decided that this is one for his discount buddy

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New TV star from the world of factoring

On ITV2 is a reality TV show called Bad Bridesmaids and tonight’s episode at 9:00pm features one of our very own making a fool of herself showing the world that the acting profession’s loss is factoring’s gain.

I fear that Emily won’t be long for the world of commercial finance if any Hollywood casting agents are watching but at least in years to come when I’m watching her starring in the latest Michael Bay Blockbuster I can take pride in the fact that she once bought me lunch icon biggrin New TV star from the world of factoring

Emily New TV star from the world of factoring

 

 

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Arbuthnot to have yet another crack at factoring

According to media reports Arbuthnot wish to break into the SME market to “take advantage of big banks’ reluctance to lend to small businesses” and their forthcoming entry into an already overcrowded invoice finance market is one of the ways in which they hope to capitalize on this.

If my memory serves me correctly this will be their third attempt at the factoring market and one has to hope that this latest incarnation will be more successful than the last one.

I seem to recall that Arbuthnot Latham Factors was one of earliest non high street bank factors and one of my colleagues left the company that we then worked at in the late sixties to join them on the South Coast as that was closer to his home than our Croydon office.

Unfortunately I don’t recall what happened to the company but the bank decided to have another crack at factoring and set up Arbuthnot Commercial Services in 1994  but 14 years later that found itself with a few problems and was sold to Bibby where I guess it was absorbed into Bibby’s Southern office.

At a time when the independent sector are working hard to stand still it’s not really the best time to launch yet another provider as the market is already saturated but I wish them the best of luck anyway and hope that it’s third time lucky

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New factoring statistics show flat market for the SME sector

The ABFA released statistics for factoring and invoice discounting in the first quarter of 2014 last week accompanied by a press release claiming that it had been a “record year for asset based finance as businesses step up borrowing against invoices to fund growth” and “Invoice finance shows 29 per cent growth since 2009/10”

Whilst I’m sure these statistics are accurate they are not a reflection of the factoring industry as relating to the SME sector because as usual the figures and resultant statistics are heavily skewed by the inclusion of companies with sales in excess of £50m per annum.

More pertinent statistics relating to the SME sector of companies with annual sales up to £10m per annum show that the net number of companies using factoring and invoice discounting in 2013 rose from 39,292 to 39,402 a magnificent net increase of just 110 companies.

Moreover the advances to these companies at the end of 2013 were also at a similar level to the end of 2012.

The biggest growth area in terms of advances seems to have been to companies with annual sales in excess of £50m with the 713 companies falling into that sector responsible for a whopping 40% of the total advances made.

Another pertinent statistic is that the net gain of 110 companies using these facilities is made up of 9,126 new companies less 8,762 who for one reason or another ceased factoring which is considerably worse than in the preceding two years.

Client numbers for the first quarter of 2014 show the rather amazing statistic of 2,185 new clients counter balanced by exactly 2,185 lost clients.

I was rather amused by the comment made in the press release by Martin Morrin, Chairman of the ABFA, who said: “Invoice finance is playing a bigger role than ever in funding British businesses’ growth, and has truly stepped into the mainstream of business funding.”

“Since the credit crunch, invoice finance has become an even more important source for SMEs for funding as they struggled to access traditional term loans.”

For those that don’t know, Mr Morrin is the Managing Director of RBS Invoice Finance which is a subsidiary of Royal Bank of Scotland one of those very same high street banks that are proving so difficult to obtain traditional term loans from thus forcing their customers into factoring.

The ABFA press release also stated that “that many businesses do not realise that the invoices that they have outstanding with customers are often the most valuable asset owned by the business, and that banks and other funders will willingly lend against them.

Intriguingly the fact that so many companies were unaware of invoice finance was one of the topics raised at the recent ABFA conference which did make me smile as the factoring companies were chuntering about exactly the same thing forty years ago and I wouldn’t mind betting that it’s been raised and discussed many times in the intervening years.

I’ve come up with a novel suggestion – why don’t all of the factoring companies get together and fund a joint marketing effort to raise awareness of the industry and the benefits available to the SME sector.

On second thoughts it’s a silly suggestion as it’s far too radical icon biggrin New factoring statistics show flat market for the SME sector

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Some factoring brokers aren’t very bright

On 11th February 2014 I posted an article about David Pollard whom I had spotted trading as a factoring broker – Milestone Funding out of Chesterfield and whose previous companies had been wound up in the public interest by the High Court for poor business practices following an investigation by the Insolvency Service.

A couple of weeks later the blog was visited by someone using the IP address 86.160.209.75 which resolved to an IP address in Chesterfield and this person visited the blog on a further 12 occasions seemingly only interested in the post about David Pollard and Milestone Funding and ignoring anything else on the blog

Shortly after that I started to get inundated with telephone calls from a variety of companies claiming that I had been on their website enquiring about telephone systems / PPI claims / water coolers and dozens of other things. Fortunately or unfortunately the bulk of the calls came in whilst I was in Spain on vacation and it was left to my colleague to fend off these callers.

Most of us grew out of childish tricks like that with puberty but obviously some people are just plain immature. They also don’t know much about the internet either otherwise they would know that every time you make an enquiry on a website it logs your IP address.

I’m sure that most people who have read down this far will have an inkling of what that IP address might be. Yes, it’s the very same 86.160.209.75 from Chesterfield that was so interested in my blog posts about Mr Pollard and his Chesterfield based company Milestone Funding.

Co-incidence? I’ll leave you to decide

 

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Everything you needed to know about factoring but were afraid to ask

I came across the following on a financial services blog:-

The Payments Are Generally The Identical So It Truly Is Referred To As Fixed Repayment.

The bottom line is that business loans are not hard to get  they were just really easy to you like and so, you should don’t hesitate in availing this kind of special loan deal. Mid size companies with 20% or more profit margins or large companies is feasible in your area, and must answer the questions a loan company would ask… There is no benefit for financial services authority sbf to become involved in the collection of the invoices you like and so, you should don’t hesitate in availing this kind of special loan deal. The bottom line is that business loans are not hard to get  they were just really easy to is formatted into secured and unsecured forms. To renovate is feasible in your area, and must answer the questions a loan company would ask…

An individual can make arrangements or special your office.. Speak to a business financing expert to determine what benefits of factoring work for you, how the financing get a few years ago and have now resorted back to where they should be on the difficulty scale. If the factoring company can’t help them – they great business partners and help finance your business growth!! ) and offer facilities anywhere from businesses that have a reliable, consistent customer base. An individual can make arrangements or special and get paid.

Instead, factoring companies will primarily consider exactly how borrowers conceive things to be.. In essence, applications for business loans to start up companies are challenging for people today to have the things they need, significantly much less what they want. Speak to a business financing expert to determine what benefits of factoring work for you, how the financing exactly how borrowers conceive things to be.. You on the other hand can use that additional your office.. It is clear that unsecured business loans are costlier a wide variety of business purposes.

If anyone wishes to read further words of wisdom on a wider range of financial issues the website is http://madurorecords.com/

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Milestone Funding

I spotted this company promoting themselves as the UK’s leading factoring broker in Google Adwords and as I had never heard of them before decided to have a closer look.

A rather nice website claimed the following:-

Established in 2008, Milestone funding has assisted more than 2,000 UK businesses of all sizes to gain control of their cash flow challenges by introducing the most suitable funding solutions on the market, releasing the working capital that is fundamental to their growth.

The company has already helped thousands of businesses throughout the UK, from start-up companies to International enterprises. Milestone brokers deals from £50,000 to £10m turnover on a regular basis

At the foot of every page of the website are the logos of Aldermore, Close Invoice Finance, Lloyds TSB Commercial Finance, Bibby Finance, Ashley Commercial Services, Hitachi Invoice Finance and SME Invoice Finance and whilst no representations are made there it is implied that Milestone are dealing with them.

I was surprised that I had never heard of a broker who was claiming to have done 2,000 deals in the last six years so I I checked out the website with Nominet, the domain name registrars, to find that it was only registered in January 2014 and the owner was David Pollard of Future House, Chesterfield S40 1SZ

Still none the wiser I Googled the address to find an interesting article about Mr Pollard stating that his previous two companies had been wound up in the public interest by the High Court for poor business practices following an investigation by the Insolvency Service.

The two companies were TAG (Chesterfield) Limited (TAG) and The Recovery Partnership Limited both traded under the name ‘The Insolvency Group and ‘The Accounting Group’ and full details can be found in this article headed Insolvency Service gets two murky Derbyshire accounting firms shut down

http://insolvency.presscentre.com/Press-Releases/Insolvency-Service-gets-two-murky-Derbyshire-accounting-firms-shut-down-68d0c.aspx

I have spoken to three of the factoring companies who’s logos appeared on the website and none of them had heard of Milestone Funding so all I can say at this juncture is caveat emptor

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Factoring brokers – the right or wrong way?

I had a call today from someone who owned a recruitment company who was looking at factoring and who admitted straight away that they had already been in touch with a high profile broker but was unsure whether they were independent or not.

It seems that the broker had effected introductions to three factoring companies which is a practice that I heartily disagree with but I can see the advantages to the broker as whichever company the prospect eventually picks the broker will get paid anyway so they always win.

The problem is that I struggle to see any advantages for the prospect though. With the best will in the world all of the factoring companies offer a similar product and they will all claim to offer a first class personal service but the poor prospect will be completely unaware that the service levels actually vary quite considerably between the best factoring company and the worst.

The prospect will end up meeting representatives from three factoring companies who will all tell them exactly the same thing and assuming that they all quote fairly similar rates the company will probably end up going with the factoring company who’s salesman they get on best with. That is probably the worst way to go about things bearing in mind that one of the market leaders has a reputation for it’s salesmen making promises that it’s operational staff won’t keep and consequently renege on.

Leaving aside the question of whether certain brokers have vested interests in whom they introduce prospective customers to which is another question entirely, one has to wonder whether introducing prospects to three factoring companies adds any value to the proceedings at all as the poor old prospect may as well pick three factoring companies out of the telephone book at random and contact them directly.

I have done what I always do and that is to discuss the company and it’s requirements in detail and introduce them to the single factoring company that I felt suited their needs most of all.

Let’s see who wins out – the money making sausage machine or the old fashioned broker icon smile Factoring brokers – the right or wrong way?

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Factoring Solutions new year resolutions

I have made some New Year resolutions on behalf of Factoring Solutions in order to reposition ourselves from being known as the ethical factoring broker to the rich factoring broker.

Instead of introducing a prospect to the factoring company that we feel is most suited to their needs we are going to take a leaf out of the big boys books and introduce them to three or more factoring companies on the basis that whichever one they pick we will still end up winners.

Before putting in our recommended factoring companies we will contact them first to make sure that they haven’t got the lead from someone else as if they have we will put in someone else instead. It isn’t in the prospect’s best interests but hey we stand a better chance of getting a fee out of it and that’s what’s most important.

At the end of the year we will persuade the client that it’s in his interests to change factors. It isn’t really but we will earn another fat finders fee by churning the deal

One of the most lucrative areas of broking is handling manageaways from factoring companies that want to get rid of a client that they no longer want. In future we will only introduce leads to factoring companies that reciprocate by giving us managaways.

Finally we are going to tie up with an Insolvency Practitioner and insist that if the factoring company wishes to appoint Administrators to any client that we introduce then they have to use our nominated Insolvency Practitioner so that we can earn from that too.

A few years ago the Chief Executive of a factoring company once described me as one of the last gentlemen factoring brokers and that reputation means more to me than the extra income that I could undoubtedly earn if I actually went through with my New Year’s Resolutions so as with my resolutions every other year these are resolutions that will NOT be carried out.

Happy New Year to all my clients and funding partners and rest assured that Factoring Solutions will continue to act only in your best interests and not those of ourselves so we will continue to introduce companies to the single most suitable factoring company.

In fourteen years we have never churned a deal and will not be starting now and if our favoured invoice finance companies don’t use us to handle their manageaways we will still use them anyway and if (God forbid) one of our clients needs to go into Administration the factor can appoint whichever firm of Insolvency Practitioners they are most comfortable with

Ian

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Factoring for small companies part 2

Having sung the praises of a factoring company last week for the speed of their response it would seem that this deal is no longer going to happen.

The factor suggested taking the documents down for signature but the prospect adamantly refused to meet them saying that if the whole deal couldn’t be done by email he would prefer not to bother.

Strange fellow and I wonder what it was he was afraid of but it leaves me thinking that perhaps the factoring company involved have just dodged a bullet

 

 

 

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