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 🙂