Working Capital Partners – brokers and introducers beware

Working Capital Partners is a spot factoring (single invoice factoring) company set up a few years ago which is wholly owned by Mr Perry Burns whom according to his LinkedIn profile had no factoring experience prior to setting up the company.

Factoring Solutions is one of the oldest established specialist factoring brokers around and we have introduced various companies to Working Capital Partners over recent years and received introductory commissions in return. One of the companies that were introduced by us has grown significantly and is one of their largest income earners if not the highest income earner for them. To put this in perspective their income from this client during the year to 30th June 2016 would have been in excess of £76,000 and running at the rate of £110,000 pa six months later judging by the commission paid to FS

According to the latest published accounts the total outstanding debts of Working Capital Partners as at 31st December 2016 were just over £2.5m whereas the current assets of their client just one month later were a smidgeon over £800,000 and with a facility limit of £500,000 this particular client could have represented 20% of the factoring company’s total outstanding debts.

Unfortunately the client was approached by another factoring company earlier this year who made them an offer that they thought that they couldn’t refuse so they terminated their facility with Working Capital Partners to move to the new factor.

Once the company had terminated and left, the new factoring company decided that they didn’t want to fund the company after all leaving them in no mans land so they returned cap in hand to Working Capital Partners who took them back again.

Thumbs Down from Factoring BlogIt would seem that Working Capital Partners in their infinite wisdom have decided that as the company approached them directly to return that no further commission would be payable to Factoring Solutions as it wasn’t an introduction from ourselves.

From our point of view this disgraceful behaviour goes against the conventions within the factoring industry as all reputable factoring companies take the view that they wouldn’t have had the client in the first place if it hadn’t been for the introducer.

In this instance we received a telephone call from Andy Phillips the Director of Sales of Working Capital Partners to tell us of the good news that the client wanted to return and that Perry Burns was discussing a new facility for them. My response was to ask Andy Phillips to let me know if for any reason they didn’t offer a new facility and I would try and find them a new home but if they were happy to go ahead I would leave it in their capable hands.

This would have been in about the third week in August as although I didn’t make a note of the exact date I do recall that I was on holiday and walking along the promenade in Calheta, Madeira when I took the call.

I didn’t hear any more but happened to notice that Working Capital Partners had registered a new charge on 31st August so I sent Andy Phillips an email saying that I was surprised that I hadn’t been informed that the client had signed up again to receive a rather sarcastic reply in which he referred to the company as “your client” (his italics not mine)

It has now been confirmed by a director of Working Capital Partners that they don’t intend to pay me commission on the re-signing despite the fact that the gap between the old facility and new was just a matter of a few weeks.

Needless to say I am not happy about this and when discussing the matter with a couple of directors of factoring companies they both told me that Working Capital Partners behaviour was despicable but it was partly my fault as I’m old fashioned and believe that my word is my bond and I do business on a handshake expecting others to do the same. In my defence in 18 years as a specialist factoring broker this is the first time that I have ever been shafted by a factoring company.

We have had situations in the past where other factoring companies haven’t picked up additional associated companies also signing up but they have always paid me commission retrospectively when I’ve told them. A couple of months ago I spotted that a client of mine that went bust three years ago started up again the same month with the same factoring company and when I pointed this out to them they had no hesitation in paying me the backdated commission for the three years.

If any broker or introducer reading this is thinking of introducing business to Working Capital Partners I would strongly advise you to make sure that you have a watertight written agreement with them before you do so otherwise you may find yourself falling victim to their less than ethical behaviour too as if they have shafted me I’m sure that they won’t think twice about shafting you either. Another point to consider is that brokers and introducers are the lifeblood of independent factoring companies so if Working Capital Partners are happy to “shaft” a broker in their grubby search for more profit what do you think they would do to a client. I leave it to you to decide.

As a postscript it’s fairly obvious that we won’t ever introduce any further business to them so there is a space on our panel for a single invoice factoring company and for the benefit of those factors that have never dealt with us I would confirm that:-

We will never introduce any company to you that we know to be a “wrong ‘un”

We will never churn any client in anticipation of higher or more commission elsewhere

We will never twist your arm to take on a client that you aren’t happy with

We will never introduce prospects to more than one factoring company on the basis that whichever wins – we do

To show just how out of kilter Working Capital Partners’ behaviour is with industry standards I have noted below some comments made by board members of other factoring companies that we deal with.

 

Comments from other factoring companies

This is shocking behaviour


We always acknowledge the originating introductory source in these circumstances and have done for you Ian and other brokers in the past

Brokers are the lifeblood of the market and provide an invaluable service and should be rewarded accordingly

Thanks for your recent email and telephone conversation yesterday.

I can confirm that referrals from experienced  professional factoring brokers are vital to our business. We appreciate our commissions are your income.

If you referred a client to us and unfortunately the client left but decided to return within a short period of time we would definitely restart paying the commission due as  without you we would not have met the client in the first place

I am so sorry to hear what has happened with another provider.

We work in partnership with our introducers and treat each and everyone of them as gold dust. Working as a team together gets the right solution for the prospect client and this is the aim in all of your introductions.

If a prospect business leaves and comes back, then the relationship will still be classed as an introduction from you. Its all about reviewing long term relationships!

Not a good representation of the sector really is it.

‘I have always stated that an introduced client remains just that, for the life of the client, including any other directly associated business’.

Agreement to pay a specific introducer should follow that operating practice as without the introducer you would not have gained the benefit of the client in the 1st place. I have worked within the factoring industry at a senior level for 25 years, and this is how we have always operated’

Factoring for small companies

It seems that certain factoring companies are speeding up the process of reviewing and taking on new clients if they are small and a couple of enquiries taken by Factoring Solutions this week have gone from start to finish very quickly.

On Tuesday we received an enquiry from a small company with only one customer that seemed to be tailor made for spot factoring so we introduced them to the appropriate single invoice factoring company and we were subsequently informed that the documents are being signed on Friday.

We received another enquiry today (Thursday) from a small company which was fairly new and where the directors were not home owners which restricted the number of factoring companies that would be interested but fortunately the company that we introduced it to were happy to look closer at the prospect and an offer was issued straight away with documents due to be signed on Monday.

It’s not all plain sailing though as we also had an enquiry from a much larger company this week and the company that I chose to speak to about them shuddered when I mentioned their name and politely declined on the basis that they had had dealings with him before and he had been a naughty boy.

Still two out of three isn’t bad 😀

Factoring Solutions – the year so far

We are now one third of the way through the year and it’s been an interesting period. Enquiries were down 25% on the same period last year but interestingly enough one third of this year’s enquiries have been for spot factoring whereas in the same four months of 2012 we didn’t receive one single enquiry for single invoice factoring.

In common with most other brokers and factoring companies the conversion rate is worse than it has ever been with far fewer companies actually signing up despite having been given pretty decent offers. Everyone has their own theories but I believe that it’s just a general lack of confidence in the economy and a wish not to take on any further commitments until the economic outlook is a little brighter.

Historically we have handled a large number of new start recruitment companies and I knew that whenever the phone rang at five minutes past one that it was yet another recruiter sneaking out in his lunch break to discuss the financing of his own operation but I have been able to eat my own lunch in peace recently as recruiters aren’t willing to strike out on their own at the moment.

Lowlights of the year included two separate healthcare companies who were unhappy with the incumbent factoring companies and wanted recommendations of factoring companies with higher service levels who then subsequently refused to speak to either of the companies that we introduced or to return their phone calls either. A company search revealed that the first company had a debenture registered to Lloyds TSB Commercial Finance one week after speaking to ourselves and the second registered a debenture to the same factoring company two months after speaking to us.

Whatever reason these two companies had for not wanting to talk to the factoring companies that we introduced them to they could have had the courtesy to pick up the phone and say “no thank you” rather than just hiding. I often feel that people like this are perhaps not best suited to running a company and these two weren’t alone either.

We then had an enquiry from a company spitting feathers at the mere mention of their existing factor claiming that the service was terrible, the account manager never returned calls and they charged for everything in sight including speaking to their account manager and they were desperate to get out of their clutches

Discreet enquiries with an insider at this particular factoring company confirmed that in his opinion all of the complaints were justified so we introduced them to a competitor who was unable to progress the case as the prospect complained that moving wouldn’t save them any money.

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