Factoring Blog News, views and gossip from the world of factoring and invoice discounting

“Ray Moore is the Managing Coach in the ActionCOACH Chelmsford office. He is an energetic and dynamic coach to both business owners and fellow coaches. In the words of one of his clients “Coaching is only as good as the coach! Ray Moore is an excellent coach.”

Ray trained as an accountant but he quickly realised his destiny lay in the cut and thrust of commercial life. His career has encompassed a wide range of industries including manufacturing, property, retail and distribution.

Over the past 14 years Ray has successfully built his own businesses. In May 2001, he sold his last £6million turnover business to a FTSE100 company for above sector PE ratio.”

The above is quoted directly from his own website but if anyone wants a look at this dynamic man’s website this link may be of interest:-

Does it seem at all familiar? Well it should to many of you as apart from a new six word title it is lifted word for word from my website. One would have thought that a company like Action Coach would have the resources to create their own text without having to resort to stealing mine .

Would you trust a company that is happy to steal the intellectual property of others. I know I wouldn’t

Posted under Factoring

The grapevine has been full of rumours about Venture Finance being the latest target of Deutche Bank’s attempt to break into the UK factoring market but it has recently come to the ears of the Factoring Blog that having got as far as due diligence they have suddenly lost interest as apparently they weren’t too keen on some of the structured lending deals that they looked at

Posted under Factoring

I have been approached by a company who complained about the service that they were receiving from their factoring company and who asked me to find them a replacement. It would seem that the factor was being very strict on concentration limits and wouldn’t fund more than £30,000 on their major customer whereas they were trading at £70,000 per month with them. When discussing the creditworthiness of the customer the chap told me that they would never not pay their bills as they were actually silent shareholders in his company.

There were three possible ways to play this as I could have tried to find him another factoring company without disclosing to them that the major debtor was an associate and earned myself a nice commission in the process or else I could have told him that no factoring company would take him on and fund an associated company if he came clean about it or I could have refused to handle the enquiry and have a quiet word with the factoring company.

It is a bit of a moral dilemma as prospective clients discuss their business with me in confidence and expect me to either find them a replacement factor or else to drop it completely but there again I would have a struggle with my conscience if I knew that a company was effectively defrauding a factoring company and I did nothing about it.

I struggled with my conscience for ten minutes then had a quiet word with someone at his factoring company and warned them

Posted under Factoring

One of my factoring buddies sent me the current edition of Business Money which to those that haven’t come across this august journal is a magazine apparently devoted to the factoring industry which says lots of nice things about all of the factoring companies and is funded by advertisements from them too. He seemed to be highly amused that the magazine had printed a dig at me

When skimming through it there were three paragraphs that caught my eye.

1) Business Money, over 16 years has always endeavoured to report hard commercial reality

2) The job of the media is to report facts, accompanied by comment given that the public cannot be sufficiently well-versed in every topic being reported on to place the news in context

3) The Cattles saga goes on, a situation calling for some sensitivity and not helped by one or two, who really do need to get out more, without their anoraks, and who seem to delight in creating as much anguish as they can for a great bunch of men and women who are just trying to do their job with something of a cloud over them.

The urban dictionary defines an “anorak” as someone “obsessively interested in a thing or topic that doesn’t seem to warrant such attention” so it would seem that because I have a problem with the fact that Cattles Invoice Finance are continuing to take on new staff and clients at a time when their parent company is struggling for survival I am an anorak that should get out more.

I’m quite sure that the friendship shown by Business Money towards Cattles Invoice Finance has nothing to do with the full page advert that appeared a few pages along in the same edition.

The Factoring Blog was set up partly because there is no media devoted to reporting “the hard commercial realities” within the factoring industry and there is much that needs to be said but unlike Business Money we can be objective because we don’t have to worry about biting the hand that feeds us.

Posted under Cattles Invoice Finance, Factoring

Ashley Commercial Finance have issued a press release which included the phrase “We have decided that in the current climate risk is more easily managed at the “small ticket” end of the factoring market and have therefore introduced a temporary funding cap of £50k for new business.”

We had heard rumours of funding restrictions being placed on clients and wonder whether this is connected with other rumours doing the rounds about substantial bad debt losses within their client portfolio.

There is a well known company within factoring circles whom no-one would touch with the proverbial bargepole but if rumours are to be believed Ashley unwisely took on a client connected with this company and are now suffering the consequences.

Posted under Factoring

We had an enquiry last November from a company who had a successful relationship with an independent factoring company but had been tempted away to one of the bank factors with talk of cheaper rates.

Within 3 months the unapproved debts had risen from £700 to over £40,000 and it became apparent that despite paying for a full credit control service the factoring company were actually not doing much at all so the cost of the facility had risen whilst the lack of cash flow due to the increase in unapproved debts was slowly strangling the life out of the company.

I introduced the company to one of the independents who are known for their excellent service levels and thought that would be the end of his nightmare but unfortunately that was not to be the case. The new factor was never able to buy out the investment of the bank factor as the lack of credit control had left the ledger in an unholy mess.

As the factoring facility was plainly not working the company stopped sending invoices to the factor and and has been struggling to self fund for the last few months. Speaking to them today it seems that the outstanding factored debts now total over £160,000 all of which is overdue and unapproved.

The company now wish to take legal proceedings against the factor for non performance on the basis that they paid them for a full sales ledger service including credit control that the factor has failed to provide.

Although a factoring agreement will be worded in such a way that the factor is not responsible for anything I’m sure that would not hold up in a court of law if it could be proven that they were negligent but has anyone successfully sued a factoring company for inadequate performance?

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Posted under Factoring, Factoring companies

Many people are catching onto the idea of blogging or article writing as a sales technique despite the fact that most search engine optimisers will tell you that the links have dubious value as Google will discount inbound links from the same source, especially if that source is also poorly rated.

I have read some very boring factoring blogs as most of them are just a rehash of the same article about how wonderful factoring is. This means that the blog has failed the first test which is that it must be readable and with the best will in the world no-one is going to return to a site where they keep rehashing the same article which is itself stuffed full of linked keywords.

There are some articles on factoring that are worth reading though and this morning I came across the following little gem:-

CONSTRUCTION INVOICE FACTORING BOOSTS CASH FLOW FOR BUILDERS IN TOUGH ECONOMY

Many builders and contractors are remaining dissolver by attractive plus of the justness that exists in their accounts receivable. Factoring cerebration invoices has embellish an primary factor of doing playing for some companies.

For more click the link…………

I wonder how many clicked the link to read the rest of it

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Posted under Factoring

Factoring charges in the past have been driven down and down as one or two of the major bank owned factors have tried to buy market share at any cost. The activities of an internet lead generator with an automated online pricing model hasn’t helped as any such thing must be price driven thus driving prices down even further and the factors have tried to redress this by looking at other ways of increasing revenue rather than affect their headline rates. To this end we have seen the introduction of facility commissions which is a percentage of the agreed facility and is addition to the factoring commission. At least one of the big bank owned factors is now incorporating renewal commissions too if the poor client wishes to renew his facility at the end of the year whilst the worst one of the lot has been sneaked in by one of the big boys who has stuck in a termination fee which becomes payable if the client wishes to terminate his facility whatever the reason whatever the time.

Wageroller and Smart Flow Finance have bitten the dust although there are rumours that Wageroller has resurfaced under a new name but the only factoring company to have succumbed in the first quarter of the year has been Challenge Finance.

I started off the year by announcing that GMAC had pulled down the shutters for new business but I had a meeting with one of their regional directors yesterday who told me that they were now in full steam ahead mode and with quite an innovative range of ABL products too.

Even in a fast changing world like the one we currently live in there are some things that never change. At the end of last year I announced that the parent company of Cattles Invoice Finance were about to sell the company and that would happen “any day now”. Six months down the line the supposed sale of this factoring company is still just round the corner as the parent gets further and further into the mire with it’s negotiatons with bankers unresolved, it’s accounts delayed as the auditors won’t sign them off and the shares suspended. Still I’m sure that a Cattles insider will be contacting me shortly to let me know that the sale will be happening “any day now” as has been happening at monthly intervals throughout 2009 so far.

The other enigma is Close Invoice Finance which at one time was a market leader in terms of client satisfaction but where the stories of ill treatment from unhappy clients just seem to keep on coming. This year to add to the confusion Close have closed the operating centres in Birmingham and Manchester making a number of redundancies in the process in order to cut costs whilst at the same time employing an industry heavyweight on what must be a huge financial package to run what’s left of the Northern operation, as well as buying a small factoring operation in Northern Ireland.

My predictions for the second half of 2009 are to expect much of the same. The market will still be tough to operate with the well run independents riding out the storm without too much damage to either their reputation or bottom line but I think that the recession coupled with the tough attitude taken by the credit insurance market will start to see big problems in the top end of the invoice discounting sector with companies turning over in excess of £50m failing and possibly resulting in significant bad debt losses for the banks operating those facilities.

Time will tell.

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Posted under Cattles, Cattles Invoice Finance, Close Invoice Finance, Factoring, GMAC Commercial Finance, Invoice discounting

When reviewing the first half of 2009 I started by looking back at comments I made at the beginning of the year in connection with my expectations for the factoring market as well as general comments.

My comment that “I guess that with the banks’ reluctance to lend money and the general state of the economy it is only to be expected that enquiries for factoring and invoice discounting would be running at high levels in 2009” proved to be miles out and whilst Factoring Solutions did receive a record number of enquiries in January, that didn’t last long and the enquiry levels drifted downwards to it’s current very poor level.

It would seem that rather than using the banks’ reluctance to lend as a reason for turning to factoring and invoice discounting the SME sector has decided that in these uncertain times they don’t want to commit themselves to a factoring agreement with it’s associated costs if the opportunities for expansion won’t be there.

Talking to other brokers it would seem that most are fairly quiet with the exception of those owned and operated by insolvency practitioners who are busy with pre packs of existing factoring clients that have failed or other companies that need factoring to provide working capital for the restart.

The only other sector of the broking community that has done well in the first six months of the year are those that have built up strong relationships with the bank owned factors by dint of introducing companies to their own bank in return for a fat fee. Now that the banks have decided to move the goalposts they have found themselves with a large number of clients that no longer fit their new criteria and those clients who find themselves surplus to requirements have been handed over to the banks’ pet brokers to find them new homes.

Highly lucrative work if you are of that mindset but here at Factoring Solutions we run an ethical broking service where the needs of the customer are paramount.

If the ABFA stats are to be believed (and I have my doubts on that score) the figures for the next quarter will be interesting as the number of clients will have gone down again as more and more fall by the wayside.

It would seem that those factoring companies that were a little choosier in the past are the ones that are suffering least at the moment as whilst their books are still contracting the rate is much slower than average. It is the factoring companies that used to operate on the basis of “If it moves sign it up and if it doesn’t move still sign it up” that are suffering more at the moment with much larger numbers of client failures with their consequential impact on staff time as well as bad debts.

Most factoring companies are now looking much closer at new business propositions with such things as single debtor deals much more difficult to place and those with concentration problems also being studied more carefully too.

continued….

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Posted under Factoring, Factoring companies, Invoice discounting, factoring brokers

It seems that the Venture Finance experiment to automate the whole factoring process and offer a stripped down facility online to the smaller enterprises has not been successful and is being closed down.

It was an interesting concept starting off with an online application form but it would appear that the applicants / clients were of poor quality and the whole concept was causing too many problems and losses so had to end.

Where are the companies who have been turned down by everyone else going to go now

Posted under Factoring, Venture Finance