RBS Invoice Finance charges to small businesses

I have just had a telephone call from a small company who were about to sign up with RBS Invoice Finance until she read our website and thought that she should talk to someone from the independent sector first.

The company are struggling a little due to the recession and turnover is down slightly to £300,000 per annum with outstanding debts of £50,000. RBS have made an indicative offer of terms but it wasn’t the factoring commission rate that astounded me but the setup fee of £1,500.

I don’t think that I have ever come across a setup up fee so high for such a small company as it equates to 0.5% of turnover or 3% of the likely funding line. I don’t know how they can justify this sort of charge when the independent sector would be charging about one third of that, especially when the customer’s ledger consists of five customers.

Royal Bank of Scotland can make as many public announcements as they like about their commitment to helping the small business sector but even Shylock would have been pleased to get away with charges like that.

The factoring industry is closed this week

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.

Factoring company of the year is…..

Almost all of them.

We were approached by a company last week that was looking for a factoring facility and having read our website they were interested in our recommendations. The MD mentioned that he had already approached Cattles Invoice Finance on the basis that they were award winners to which my response was that almost all factoring companies were award winners somewhere or another.

Looking at the factoring and invoice discounting companies’ website I noticed that Cattles were proudly proclaiming to have won the Business Innovation of the Year award at the National Business Awards’ North West regional finals.

Moving onto Close Invoice Finance and they are claiming the Business Moneyfacts Best Factoring and Invoice Discounting Provider award for the third year running whilst Venture Finance are the winners of the Credit Today Factor Discounter of the Year for the second year running.

Perhaps the most amusing website is that of Bibby Factors where they are proud of the fact that they were voted best factor and discounter by NACFB 2003 2004 2005 2006 thus prompting the question “What happened in 2007 then”

In addition to the above I went to the annual Dealmakers Dinner late last year which included an awards ceremony and GE Commercial Finance managed to win the Dealmakers Asset Based Lending award of the year.

I have no doubt that the clearing bank factors have also won a shelf full of awards between them as I seem to recall that Lloyds TSB was the victor at the Dealmakers Dinner in the previous year.

Oddly enough we introduced the prospective client that started me thinking about awards to one of the few factoring companies that doesn’t seem to have won an award at all even though they consistantly offer an above average service at competitive rates.

Bank of Scotland screws it’s factoring clients

We were recently approached by a company that had been factoring it’s invoices with Bank of Scotland’s factoring division for over two years but now wanted to change.

Having arranged an introduction to a replacement factor the company tried to give notice to be told that they were on a rolling 12 month contract with three month’s notice to be given on the anniversary date of the Agreement and they could either stay for another nine months or else pay a hefty termination fee.

In an age where most factoring companies are reigning in their restrictive practises it is a shame that Bank of Scotland is still trying to screw as much money out of their customers as they can.

Caveat Emptor


Factoring Solutions

Factoring interest rates

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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