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

With factoring companies like Bank of Scotland having pulled up the shutters to new business and laid off their sales staff and others like GE Commercial Finance and GMAC just marking time the employment market is being inundated with factoring salesmen looking for jobs. Those few employment agencies that specialise in recruiting for factoring companies have more CVs on their files than ever before but unfortunately there aren’t any vacancies to fill.

The salesmen with proven track records will probably end up with one of the few vacancies that will be occuring in the near future whilst the rest will either leave the industry or try their hand at broking. I fully expect to see an upsurge in inexperienced factoring brokers this year and would suggest that anyone looking at factoring or invoice discounting should enquire a little more deeply than normal into the credentials of their chosen broker and perhaps even make sure that they are members of the Independent Factoring Brokers Association

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Posted under Bank of Scotland, Factoring, Invoice discounting

It was announced in the final week of 2008 that GMAC had won US approval to have banking status in a move that should help the company stave off bankruptcy. This is of interest to us as they are the parent company of GMAC Commercial Finance, a company that was once the market leader for factoring and invoice discounting in the UK but which seems to have lost it’s way since Lloyds TSB sold it in the late nineties.

GMAC Commercial Finance appear to have put up the shutters for new business some time ago but if the parent company have any cash left from the interest free loans they are providing to Americans to persuade them to buy GM cars, perhaps they might once again become active in the UK factoring and invoices discounting markets

Posted under Factoring, GMAC Commercial Finance, Invoice discounting

Today’s 1% cut in base rate to 2% will probably have negligible effect on SME factoring and invoice discounting clients as firstly many of the providers have already moved over to LIBOR as a charging rate and secondly many of those who have remained on base rate will have minimum base rates included in their agreements and these could well be 4% or 5% so any factoring client on 3% over base could still be paying 8% pa

Time to dust off those factoring agreements and check the wording

Posted under Factoring, Invoice discounting

Not much will be happening this week at senior levels in the factoring and invoice discounting industry as the ABFA (the industry’s trade association) is having it’s annual jolly conference and all the great and good in the factoring industry will be attending.

Where else would the self styled “UK based trade association” be having their conference in these austere times but Barcelona

It should be an interesting conference as more than one member of the ABFA isn’t writing any new business at the moment but at least one member might usefully save some money by combining the conference with a trip to Bank Santander to discuss takeover terms in what is probably the worst kept secret in the factoring industry.

Posted under Factoring, Invoice discounting

In an article in the Sunday Times today it was reported that Payne Timber who had an invoice discounting facility with RBS Invoice Finance had been put into Administration as a result of the Bank reducing it’s invoice discounting facility from £500,000 to £150,000.

On another blog I read this weekend that three different suppliers to the automotive industry had their invoice discounting facilities reduced as the factoring companies had fallen out of love with the car industry.

These factoring companies are going against the spirit of factoring and invoice discounting as the whole idea is that funding increases in line with sales.

Obviously in a falling market when sales are down the levels of funding will also be reduced but to arbitrarily reduce facility limits as per the examples shown is the quickest way to ensure that their clients fall into the clutches of the Insolvency Practioners.

Fortunately there are still factoring and invoice discounting companies out there that don’t treat their clients in such cavalier fashion.

Ian

Invoice Discounting UK

Posted under Invoice discounting, RBS Invoice Finance

With the Bank of England’s announcement that Base Rate will be reduced by one third to 3% many clients of factoring and invoice discounting companies will be looking forward to lower interest charges but for many of them the wait will be in vain.

Many of the factoring companies will express their discount charge as a percentage over Base but most will also include a minimum Base and for quite a few that minimum is 5%

Due to their own internal funding problems quite a few of the major factoring companies (including more than one High Street bank subsidiary) have recently moved to charging their clients as a percentage over Libor so this cut will not do anything for them either.

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Posted under Factoring, Invoice discounting