factoring blog for news and views from the world of factoring

This is the third time that Business Money has gone bust in the years that I have been writing the Factoring Blog with a fourth company having also published the journal and now dormant which surely says something about the Lefroy family’s abilities as business people. Someone did comment on one of the earlier blog posts that there were earlier failures but I haven’t been able to verify those.

In 2011 the Lefroys tried to fool onlookers by changing the name of Business Money Ltd to Montirone Ltd prior to putting it in liquidation thus hoping that no-one would notice whilst the magazine carried on being published under Business-Money.com Ltd.

The statement of affairs of the previously named Business Money Ltd showed that the net worth of £43,500 in the last published accounts dated just a few months prior to liquidation had now turned into a huge deficit of £481,000 according to the statement of affairs with HMRC (yes that’s you and me) owed a massive £127,000

The new publisher (Business-Money.com Ltd) carried on for a further couple of years before that went into Administration with a deficiency of £161,000 and owing HMRC (yes that’s still you and me) even more this time round at £183,000

There was some very creative accounting at use here as there was a statement in the Administrator’s report that “On 21^st October 2012 the company acquired 25% of the brand value of Business Money magazine from RH Lefroy at a market value of £250,000″ This implies that the brand name was worth £1m which was a huge sum for a magazine that kept going bust

Still undaunted by the second “bust” within a couple of years the magazine carried on regardless this time published under the umbrella of Business Money E-mbrace Ltd helped with the financing by the late unlamented factoring company First Capital Factors Ltd. This company hasn’t gone bust but didn’t trade for long, seemingly to cease at about the same time as it’s factoring company went bust. It’s last filed Balance Sheet as at September 2021 shows current assets of £250,000 with current liabilities of a similar amount but no details of what these amounts represent.

At some period in the last few years the publisher changed to Business Money Promotions Ltd but any hope that this one might be more successful was dashed when this incarnation went bust last week just a short while after it’s erstwhile Managing Director Sophie Groves resigned in favour of RH Lefroy.

The statement of affairs shows a deficit of £138,000 with HMRC owed £83,000 this time around.

Is this the end of Business Money? Not likely it’s now being published under the banner of Business Money Europe Ltd and I wonder how long this one will last.

Last month I lost my largest factoring client which although sad personally does provide me with an interesting factoring case history for one of my now very rare blog posts.

The company involved was a recruitment agency turning over several millions that had approached Factoring Solutions some six years ago saying that they weren’t happy with their existing factoring arrangements and as a result I placed them with a factor that I had used for many years who offered back office facilities as well as having a reputation for excellent service levels.

The client’s systems were not brilliant but were deemed to be adequate and although it wasn’t the smoothest running account as time went on more and more mistakes were being made by the client on time sheets resulting in invoices being disputed. This was partly due to the huge turnover of accounts staff as they never seemed to last long.

The factoring company contacted me in July whilst I was enjoying the Madeira sunshine to tell me that they were concerned at the deterioration in the ledger and were worried that their investment was at risk feeling that if anything happened they would be unable to collect out. They had offered to send one of their client managers down to sort out the administration feeling that it wouldn’t take them long but the client refused.

I had a further telephone call a couple of months later from the factoring company saying that they were now extremely worried and they asked me if I would like to move the company to another factor but regretfully I felt that in all conscience I wouldn’t be happy doing that knowing that there were serious problems  within the portfolio and the factoring company responded that in view of the fact that the client had refused all offers of help they had no option but to give them three months notice of termination.

The company has now moved on and has ended up with one of these newish factoring companies which I know little about but a few minutes at Companies House show that two years ago the factoring company had a negative net worth and charges over it’s assets by it’s directors, neither of which are a good sign.

In the old days it was a rarity for a factoring company to go bust but recent years have seen more and more newer independent small factors ending up in Administration which is quite worrying and I am hoping that one mal administered recruitment company won’t be enough to take down another one.

Construction recruitment fraud in the factoring industry seems to one of the growing problems within the the invoice finance world.

I had enquiries from two recruitment companies in quick succession towards the end of last year that were fairly obviously set up to deliberately defraud factoring companies and another over the weekend which is why I thought it time to put pen to paper.

What worries me is that some factors (including bank owned factoring companies) are so lax in their due diligence that they take on these fairly obvious fraudsters and end up losing money with sums in excess of £1m being lost by at least one bank owned factoring company and others being caught for lesser sums.

A further concern is that brokers try and punt these fraudulent deals around the market place either because they aren’t bright enough to spot an obvious bad un or else because they couldn’t care less if they can earn out of it.

The first of my enquiries telephoned to ask me to source a factoring deal for them. According to the caller they were a fairly new company but had £1m of orders for construction industry workers if they could obtain the funding.

I suggested one particular factoring company that would have been ideal for them but he told me not to contact them as he had already spoken to them. When I suggested that if I spoke to them he would probably get a better rate he was fairly insistent that he would deal with that company himself.

Comments like that tend to set my spidey senses tingling and it didn’t take long for me to find that a company in the same line of business run by a director with the same surname had gone into Administration owing a large sum to the factoring company that he didn’t want me to contact. What made it worse was that the director had been banned from running any more companies such had been his previous behaviour.

My most recent example of this type of company came via a contact form on my website so I had time to research the company before speaking to them.

The first oddity on the contact form was that the email address from the contact was from an Outlook address and not as one would expect from a company email address. When a contact form includes a link to a website it is natural to have a look at it but this time the website didn’t exist and according to Whois the domain hadn’t even been registered.

Like many contact forms it records the IP address and this one was in Oman.

According to Companies House the company was registered in November 2019 and the first year’s accounts were filed just five weeks after the year end.

It was a most unusual set of accounts as it showed fixed assets of £1,813,000 debtors of £313,000, cash at bank of £411,430 and no creditors at all.

Although I said that I had time to research the company before speaking to them I didn’t actually bother to contact them at all as I value my reputation for integrity and in my 22 years as a factoring broker I have never once put forward any deal that I thought was wrong although there have been one or two that turned out to be fraudsters.

A dozen or more years ago I had a fairly new start telecoms company accepted and I went on holiday to lie in the sun dreaming how I was going to spend the £16,000 commission that I had invoiced before I left only to return to find the whole thing was a fraud but that’s another story

EDIT – Just five minutes after uploading this blog I received a phone call from the latest fraudster and told her that I didn’t want to deal with her enquiry to which she just replied “OK”