A history of factoring in the UK – a personal perspective

I got into factoring purely by chance as I spotted an advert in the London Evening News for a sales ledger clerk and went along for an interview with Martin Forman the then Company Secretary of H&H Factors Ltd who explained exactly what factoring was, telling me what a growth industry it would be and how beneficial it would be for me to get in on the ground floor.

I must admit that I didn’t really understand what he was talking about but having a look around the general office I noticed that no-one was doing any work as the staff were all chatting to each other with one young lad having his feet up reading the paper and eating a sandwich but despite not having a clue what the company was doing I thought that this was just the place for me and so my career in factoring started way back in 1966

In those days there were only a handful of factoring companies with the market leaders being Griffin Factors, Credit Factoring and International Factors being the subsidiaries of Midland Bank, Nat West and Lloyds Bank respectively with Barclays Factoring bringing up the rear and struggling to make an impact. The clearers were joined by a few independents led by Alex Lawrie Factors which was set up by a tea merchant but about to be acquired by Lloyds Bank, H&H Factors and Arbuthnot Latham Factors.

Life was very different for the bank boys in those days as whilst nowadays the banks are accused of forcing factoring and invoice discounting on their customers like it or not, in those days the bank managers were loathe to let their own factoring companies anywhere near their precious customers.

On the technology front – nowadays we live in an era where mobile phones contain computer chips more powerful than the mainframes that the banks used to use and whilst the basic concept of factoring has hardly changed in the intervening 46 years the technology has changed tremendously.

In today’s high tech offices if anyone wants to know a client’s availability all he has to do is to press a button, similarly all transactions and statistics relating to the account are also available at the touch of a button but it wasn’t always like that.

early accounting machine used by factoring companiesSales ledger accounting was done via mechanical accounting machines made by NCR and Burroughs with those at H&H Factors being of the Burroughs Sensimatic variety.

Every invoice factored had to be laboriously entered onto the customer’s ledger card and statement by manually picking up the previous balance and posting the new invoice on top.

The credit controller’s bible is the aged debt analysis which in those days was prepared manually on a large sheet of analysis paper. After inserting the balance the account had to be analysed by hand into the correct aged columns and when it was all finished the various columns had to be totalled and then crosscast (which invariably it didn’t)

early factoring technologyAt least we had the benefit of some modern accounting machinery to help us with the ageing with the trusty Brunsviga being my weapon of choice.

If any invoices were disputed we had to record the details of the dispute on a form F179 and send the top copy to the client for him to comment on and return. If the client didn’t reply within a set period we would re-assign the debt by handwriting a form F80.

I only mention that as I am continually astounded by my ability to remember form numbers after 46 years yet I can’t remember what I had for dinner last night which I’m sure many of you will suggest is down to senility setting in.

My other abiding memory of factoring in the sixties is that everyone in a position above that of lowly clerk was referred to as Mr and even when I left after five or six years in 1971 it was Mr Forman that I said goodbye to and although I followed his progress for many years I don’t think we ever met again so although life in general became more informal I never got to call him Martin.

Whilst I could ramble on for hours and bore you all silly I suppose that I had better leave this blog entry at the end of the sixties and continue onwards into the seventies with the huge advances in technology including the replacement of the telex machine by new fangled high tech fax machines for another time…