The ABFA have recently published the factoring and invoice discounting statistics covering the first quarter of 2009. Whilst this shows a small decline in almost every area from numbers of clients to advances made it should come as no surprise in the present economic climate.
The number of clients at the end of March 2009 was down to 46,999 from 48,536 at the end of the previous quarter and whilst 2,260 new companies were welcomed to the world of factoring and invoice discounting 3,027 disappeared in the same period. Assuming that the majority of the 3,027 went bust in one way or another it’s not surprising that insolvency practitioners are the factoring companies new best friends.
I wonder if Eric Cantona was thinking of the relationship between insolvency practitioners and factoring companies when he came out with his now legendary quote ” When seagulls follow the trawler it is because they think sardines will be thrown into the sea”
some IP’s are spending a fortune developing relationships with invoice financiers and it’s easy to see why. Their livers are under a lot of stress as a consequence so the seagulls could develop some nasty problems.
One particular IP has set up a factoring broker division in which they claim that they don’t take any commission from the factor as if to imply that they do it out of altruistic motives.
I read on an internet forum yesterday that a potential client had been advised by this company that “factoring companies can actually harm your business because they will impose lower credit on each customer and won’t let any individual customer debt go above a certain percentage of the total debt”
This is the same “broker” who allegedly advised a new start recruitment company who wanted a payroll facility as well as funding for his forecast turnover of £500,000 and who introduced him to GE Commercial Finance