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.