Government to get involved in invoice discounting ?

According to an article in the Financial Times yesterday the Government is supposedly looking at the possibilities of getting involved in invoice discounting in the hope of boosting the supply of credit and working capital to the hard hit SME sector.

 

It would seem that the favoured method would be for the Government to extend it’s guarantee facility to cover invoice discounting facilities from the major banks and apparently the Asset Based Finance Association (ABFA) have been involved in these discussions.

 

Banks have been shoving many of their customers down the factoring and invoice discounting route for several years as not only are the rewards higher but the security is better as invoice discounting is fully secured by the invoices that are being funded and a properly managed invoice discounting company shouldn’t need a Government guarantee to enable them to offer funding facilities.

 

If this turns out to be true it will be an unusual step by the ABFA to lobby for guarantees that will only be of use to some of their members but which will give them a huge advantage over the others.

 

Watch this space

Reduction in base rate may not benefit all factoring clients

The half percent reduction in bank lending rates last week may not be greeted quite so warmly by some factoring clients as they could find that their agreement stipulates that base will be a minimum of 5% as is the case with one of the largest of the independent factoring companies.

Welcome to the factoring blog

What a day to start blogging about the world of factoring and invoice discounting with the major UK banks in complete disarray having had to go to the Government, begging bowl in hand due to the complete failure of their lending policies over the past few years.

If it weren’t bad enough that the parent companies of Royal Bank of Scotland Commercial Finance, Lloyds TSB Commercial Finance and Bank of Scotland Cashflow Finance are now part Government owned we also have the situation where one of those banks is heavily involved in the funding of many of the major independent factoring companies too so we don’t know what the future holds for them either.

 

Ian

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